All-foreign LLP partners in India: who can be the resident designated partner?
Every LLP needs two individual designated partners, and at least one must be resident in India. What 'resident' means, how foreign founders meet it, and the filings.
CA Harun Raaj
makeitlegit.in
You and your co-founders live abroad. You want an Indian LLP (limited liability partnership) to hold the business. Then you hit one line in the law: someone has to be "resident in India".
This article covers who counts as resident, what to do if all partners are foreign, and the filings. It does not cover foreign-investment limits, which are a separate foreign-exchange question.
The rule in one paragraph
Every LLP must have at least two designated partners. They must be individuals. At least one of them must be a resident in India (s.7(1), Limited Liability Partnership Act, 2008).
A designated partner is a partner designated as such under s.7 (s.2(1)(j)), and the law holds that person responsible for the LLP's compliance.
The rule is about people. All your partners may be foreign, but two named individuals must carry the designated partner role, and one must meet the residency test.
What "resident in India" means
The Act gives its own definition. It is not the income tax definition. A person is "resident in India" if they have stayed in India for not less than one hundred and twenty days during the financial year (Explanation to s.7(1), LLP Act 2008).
Three points matter here.
One. The number is 120 days. Before the LLP (Amendment) Act 2021, the test was different: eighty-two days during the immediately preceding one year. The 2021 Act replaced that with 120 days during the financial year, with effect from 1 April 2022 (Act 31 of 2021, s.4, as noted in the consolidated text of the LLP Act 2008). Older material may quote the old figure. Do not rely on it.
Two. The year is April to March. For an LLP, "financial year" means 1 April of a year to 31 March of the next (s.2(1)(l), LLP Act 2008). Your 120 days are counted inside that window.
Three. The test is days of stay. The wording is "stayed in India". It does not ask for citizenship, a passport or an Indian tax residence certificate. It asks how long the person physically stayed.
The Act does not say how stay is proved. Keep passport stamps and travel records, and ask your CA how to document it.
Your options when every founder is abroad
You have three practical routes. All three work inside the same section.
Route 1: a founder who will spend the time in India. If one of you will be in India for 120 days or more in a financial year, that person can be the resident designated partner.
Route 2: an Indian-resident individual joins as a partner. Admit an individual who already lives in India as a partner, and make them a designated partner. Any partner may become a designated partner by and in accordance with the LLP agreement (s.7(2)(ii), LLP Act 2008). That person becomes personally responsible for compliance, so choose with care. We come back to this below.
Route 3: a body corporate partner with a nominee. If all partners of the LLP are bodies corporate (companies, other LLPs), or some are individuals and some are bodies corporate, at least two individuals who are partners, or nominees of the bodies corporate, must act as designated partners (proviso to s.7(1), LLP Act 2008). The residency requirement in the main part of s.7(1) still applies. So one of those two individuals must be resident.
A nominee is a person a company names to act for it.
Who cannot be a designated partner
A person cannot be appointed as a designated partner if, within the preceding five years, they have been adjudged insolvent, or have suspended payment to creditors without making a composition with them. The same applies to a person convicted by a court of an offence involving moral turpitude and sentenced to imprisonment for not less than six months, or convicted of an offence involving section 30 of the Act (rule 9(1), Limited Liability Partnership Rules, 2009).
Ask each proposed person before you file.
The deadline clock
| What | Time limit | Source |
|---|---|---|
| Report each designated partner's particulars to the Registrar | 30 days from appointment | s.7(4), LLP Act 2008 |
| Appoint a new designated partner after a vacancy | 30 days from the vacancy | s.9, LLP Act 2008 |
| File information from the LLP agreement (Form 3) | 30 days from incorporation | rule 21(2), LLP Rules 2009, as substituted in 2010 |
The forms and portal process have changed since the Rules were first made in 2009. Check the current MCA portal for the form and fee before you file.
Step by step
1. Pick the two designated partners
Choose two individuals. Confirm at least one will pass the 120-day test in the financial year. If your plan depends on a founder moving to India, write down the dates.
2. Get the identification number
Every designated partner must obtain a Designated Partner Identification Number (DPIN) from the Central Government. Sections 153 to 159 of the Companies Act, 2013 apply for this purpose (s.7(6), LLP Act 2008).
Under the LLP Rules as amended, a director identification number (DIN) is sufficient for being appointed a designated partner, and a person holding both a DIN and a DPIN keeps the DIN (rule 10, as substituted in 2011). For a new LLP, an individual who has neither a DPIN nor a DIN applies for it in the incorporation form itself, and that application can be made for no more than two individuals (rule 11, as substituted in 2018). For an existing LLP, the individual applies electronically in Form DIR-3 under the Companies (Appointment and Qualifications of Directors) Rules, 2014 (rule 10(1), as substituted in 2018). The MCA process may have changed again, so confirm on the portal before you start.
3. Foreign nationals: certified documents
Where foreign nationals residing outside India seek to register an LLP in India, their name, address and signature on the incorporation document, and proof of identity where required, must be duly certified (rule 12, as substituted in 2010). Certification can involve notarisation and apostille, depending on the country. Ask your CA what the MCA portal currently expects for each founder.
4. Give consent
An individual cannot become a designated partner unless they first give prior consent to the LLP (s.7(3), LLP Act 2008). At incorporation, an individual who consents to act as partner or designated partner files that consent with the incorporation form (proviso to rule 8). For a later appointment, consent is given in Form 9 (rule 7, LLP Rules 2009).
5. File the incorporation document
The incorporation document is filed with the Registrar of the State where the registered office will be, in Form FiLLiP, along with the prescribed fee (rule 11, as substituted in 2018; s.11(1)(b), LLP Act 2008). Along with it goes a statement from an advocate, Company Secretary, Chartered Accountant or Cost Accountant engaged in forming the LLP, together with one of the subscribers, that all the requirements of the Act have been met (s.11(1)(c), LLP Act 2008).
Check the current fee on the MCA portal.
6. File Form 4 for later appointments
After incorporation, when a new individual gives consent to act as designated partner, the LLP files that individual's particulars with the Registrar in Form 4, with the prescribed fee. The time limit is 30 days from appointment (s.7(4), LLP Act 2008; rule 8, LLP Rules 2009). The LLP also intimates the DPIN or DIN to the Registrar in Form 4 (rule 10, as substituted in 2011).
If you break the rule
The penalties are in s.10 of the Act, as amended by the 2021 Act with effect from 1 April 2022.
- No resident designated partner, or fewer than two designated partners. The LLP and every partner face a penalty of ₹10,000. For a continuing default, a further ₹100 for each day after the first. The cap is ₹1 lakh for the LLP and ₹50,000 for every partner (s.10(1), LLP Act 2008).
- Late filing of designated partner particulars. The penalty is ₹5,000, with a further ₹100 for each day after the first. The cap is ₹50,000 for the LLP and ₹25,000 for each designated partner (s.10(2), LLP Act 2008).
- Not meeting the conditions of s.7(5), or not filling a vacancy under s.9. The penalty is ₹10,000, with a further ₹100 a day after the first, capped at ₹1 lakh for the LLP and ₹50,000 for every partner (s.10(3), LLP Act 2008).
Every partner is liable in the first and third cases, including foreign founders who are not designated partners.
What the designated partner carries
A designated partner is responsible for doing everything the LLP must do under the Act, including filing documents, returns and statements. A designated partner is also liable to all penalties imposed on the LLP for contravention of those provisions (s.8, LLP Act 2008).
That is why Route 2 needs care. Put the duties, and who bears any penalty, in writing in the LLP agreement.
When a designated partner leaves
If the single resident designated partner leaves, the LLP may appoint a new one within 30 days of the vacancy (s.9, LLP Act 2008). Two things follow.
First, if no designated partner is appointed, or at any time there is only one, every partner is deemed to be a designated partner (proviso to s.9, LLP Act 2008). That pulls your foreign founders into personal responsibility for compliance.
Second, a late replacement attracts the penalty in s.10(3). Plan a back-up resident early.
What not to do
- Do not name a "dummy" resident. A name on paper does not satisfy the law if the person does not meet the 120-day test. Consent is real consent, and s.8 makes that person liable.
- Do not use the old number. Eighty-two days in the preceding year is no longer the test.
- Do not skip the residency record. Keep passport stamps, travel records, consents and DPIN or DIN letters.
- Do not assume the second designated partner must be resident. The Act says at least one of the two. The other may be a non-resident individual.
- Do not forget the 30 days. Time runs from appointment.
What to do now
- Next step: name two individuals as designated partners, confirm that at least one will stay in India for 120 days or more in the financial year, and start each person's DPIN or DIN and consent (s.7(1), (3) and (6), LLP Act 2008).
- Deadline: file the designated partner particulars in Form 4 within 30 days of appointment (s.7(4), LLP Act 2008).
- Consequence of delay: a penalty of ₹5,000 plus ₹100 a day, up to ₹50,000 for the LLP and ₹25,000 for each designated partner; for having no resident designated partner, ₹10,000 plus ₹100 a day, up to ₹1 lakh for the LLP and ₹50,000 for every partner (s.10(1) and (2), LLP Act 2008).
Have a CA review your facts before you act or file.
FAQs
Does the resident designated partner have to be an Indian citizen?
The Act does not say so. The test is stay in India of not less than 120 days during the financial year (Explanation to s.7(1), LLP Act 2008). Citizenship is not mentioned in that test.
Can a foreign national living abroad be a designated partner?
Yes, as the second designated partner, if the other one is resident. The Act asks for at least one resident designated partner, and both must be individuals (s.7(1), LLP Act 2008). A foreign individual living abroad also needs a DPIN or DIN and must give consent (s.7(3) and (6)). Name, address, signature and identity documents are to be duly certified (rule 12, LLP Rules 2009, as substituted in 2010).
What if my resident designated partner does not reach 120 days in a year?
Then the LLP may not have a resident designated partner for that financial year, which is a contravention of s.7(1). The penalty in s.10(1) of the Act applies. Speak to a CA about how the year is counted before the year ends.
Can a company be a partner and nominate someone?
Yes. Where all partners are bodies corporate, or some are individuals and some are bodies corporate, at least two individuals who are partners or nominees of the bodies corporate act as designated partners (proviso to s.7(1), LLP Act 2008). One must still be resident.
Is the old 82-day residency test still law?
No. The Act now reads "one hundred and twenty days during the financial year" (Explanation to s.7(1), LLP Act 2008, as amended by Act 31 of 2021 with effect from 1 April 2022).
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