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Setting Up of Business, Industrial and Labour Laws · Limited Liability Partnership

Partners, Designated Partners and LLP Agreement Explained

Updated 11 October 2026 · Fact-checked

Persons who subscribe to the incorporation document are the first partners; others join as the LLP agreement allows. Every LLP needs at least two individual designated partners, one resident in India (stayed 120 days or more in the financial year). The LLP agreement governs mutual rights and duties; if it is silent, the First Schedule applies.

Understand Partners, Designated Partners and LLP Agreement

An LLP is run by its partners. Under Section 22, the persons who subscribe their names to the incorporation document become the partners on incorporation. Any other person can become a partner only by and in accordance with the LLP agreement. So the agreement is the door for every later entry.

Not every partner manages compliance. The Act requires designated partners. These are the partners who carry the responsibility for filings and statutory compliance. Section 7 says every LLP must have at least two designated partners who are individuals, and at least one must be resident in India.

The proviso covers LLPs whose partners are all bodies corporate, or a mix of individuals and bodies corporate. There, at least two individuals who are partners or nominees of the bodies corporate must act as designated partners. So a company partner acts through an individual nominee.

The LLP agreement is the rulebook. Section 23(1) says that, save as otherwise provided by the Act, the mutual rights and duties of the partners, and of the LLP and its partners, are governed by the agreement. The agreement and any changes must be filed with the Registrar in the prescribed form, manner and fee.

If the parties have not agreed on a matter, Section 23(4) fills the gap: the provisions on that matter in the First Schedule apply. Think of the agreement as first choice and the First Schedule as the default.

Key rules to remember

Who are the first partners (Section 22)
Subscribers to the incorporation document = partners on incorporation
Any other person becomes a partner by and in accordance with the LLP agreement.
Minimum designated partners (Section 7(1))
At least 2 designated partners, all individuals; at least 1 resident in India
Resident means stayed in India for not less than 120 days during the financial year.
Body corporate partners (proviso to Section 7(1))
At least 2 individuals (partners or nominees of bodies corporate) act as designated partners
Applies where all partners are bodies corporate, or partners are individuals and bodies corporate.
How designated partners are fixed (Section 7(2))
Named in incorporation document, OR every partner is designated; later changes per LLP agreement
A partner may become or cease to be a designated partner in accordance with the agreement.
Consent and filing (Section 7(3) and (4))
Prior consent of the individual; particulars filed with the Registrar within 30 days of appointment
Form and manner are prescribed by rules.
DPIN (Section 7(6))
Every designated partner must obtain a DPIN from the Central Government
Sections 153 to 159 of the Companies Act, 2013 apply mutatis mutandis.
LLP agreement (Section 23)
Agreement governs mutual rights and duties; filed with Registrar; silence means First Schedule applies
Section 23(1), (2) and (4).
Pre-incorporation agreement (Section 23(3))
Binds the LLP only if ratified by all partners after incorporation
Agreement in writing between persons who subscribe to the incorporation document.

How to solve Partners, Designated Partners and LLP Agreement questions

Use this method for any question on partners, designated partners or the LLP agreement. Write in ICSI style: provision, facts, conclusion.

  1. 1Identify what is asked: becoming a partner, designated partner eligibility or duties, or mutual rights under the agreement.
  2. 2State the rule in plain words and cite the section (Section 22, 7 or 23).
  3. 3List the facts: number of individuals, residence days, whether any partner is a body corporate, and whether the agreement is silent.
  4. 4Apply each condition one by one: two individuals, one resident, 120 days in the financial year, consent given, filing within 30 days, DPIN.
  5. 5For agreement questions, check first what the agreement says. If it is silent, apply the First Schedule under Section 23(4).
  6. 6Write a clear conclusion that answers the exact question, such as valid or invalid, or which rule governs.

Quickest way: Three-check shortcut for designated partner problems

When to use it: Use it when a short case gives names, residence days and partner types and asks if the LLP complies with Section 7.

  1. Count individuals acting as designated partners. Need at least 2.
  2. Check residence: at least one must have stayed 120 days or more in the financial year.
  3. Check process: prior consent, filing within 30 days of appointment, DPIN.
  4. If a body corporate is a partner, confirm it acts through an individual nominee.
  5. Conclude with the section number.

Common mistakes in Partners, Designated Partners and LLP Agreement

  • Saying a company can be a designated partner by itself.

    Students remember that bodies corporate can be partners and stretch it to designated partners.

    Fix: Section 7(1) requires designated partners to be individuals. A body corporate acts through a nominee individual.

  • Writing the old residence test of 82 days in the preceding year.

    Older notes still circulate.

    Fix: The current text says not less than 120 days during the financial year.

  • Treating every partner as a designated partner automatically.

    Confusion with ordinary partnership, where all partners act.

    Fix: Only those named in the incorporation document, or all partners if the document so states, or those made so under the agreement.

  • Forgetting that the LLP agreement must be filed with the Registrar.

    Students treat it as a private contract.

    Fix: Section 23(2) requires the agreement and any change to be filed in the prescribed form, manner and fee.

  • Saying the First Schedule always applies.

    Students memorise the schedule and ignore the agreement.

    Fix: The agreement comes first. The First Schedule applies only in the absence of agreement on a matter.

  • Believing a pre-incorporation agreement binds the LLP automatically.

    Mixing it with the company law position on promoters.

    Fix: Under Section 23(3) it binds only if all partners ratify it after incorporation.

Worked examples

Example 1

Alpha Ventures Pvt. Ltd. and Beta Holdings Pvt. Ltd. form an LLP, Gamma Tech LLP. Both partners are bodies corporate. Can they appoint a designated partner without any individual? Advise.

Show the solution
  1. Provision: Section 7(1) requires at least two designated partners who are individuals, with at least one resident in India.
  2. Proviso: where all partners are bodies corporate, at least two individuals who are partners or nominees of the bodies corporate must act as designated partners.
  3. Facts: both partners are companies, so no partner is an individual.
  4. Application: each company can nominate an individual, so two nominees can act, and at least one must be resident in India.
  5. Each nominee must give prior consent under Section 7(3), obtain a DPIN under Section 7(6), and particulars must be filed within 30 days of appointment under Section 7(4).

Answer: No. The LLP cannot act without individuals. It must appoint at least two individual nominees as designated partners, one resident in India, complying with Section 7.

Example 2

Ramesh and Sunita are the only partners of Delta LLP. Their LLP agreement says nothing on how profits are shared. A dispute arises. Which provision governs? Also, Sunita stayed in India for 100 days in the financial year, and Ramesh for 200 days. Does the LLP satisfy the residence requirement?

Show the solution
  1. Provision on agreement: Section 23(1) makes the agreement the primary source of mutual rights and duties.
  2. The agreement is silent on profit sharing. Section 23(4) says that in the absence of agreement on a matter, the provisions on that matter in the First Schedule apply.
  3. Hence profit sharing is decided by the First Schedule.
  4. Residence: under Section 7(1), at least one designated partner must be resident in India, meaning stay of not less than 120 days during the financial year.
  5. Ramesh stayed 200 days, which is not less than 120. Sunita's 100 days is below 120.
  6. Assuming both are the designated partners, the requirement needs only one resident, so it is met through Ramesh.

Answer: The First Schedule governs profit sharing under Section 23(4). The residence requirement is satisfied because Ramesh is resident in India; Sunita is not, but only one resident designated partner is needed.

Exam tips

  • Quote the section numbers: 22, 7 and 23. They earn marks in ICSI-style answers.
  • Always write the numbers exactly: two designated partners, one resident, 120 days, 30 days for filing.
  • In case questions, start with the provision, apply the facts, then give a one-line conclusion.
  • For agreement questions, mention both the agreement as first source and the First Schedule as default.
  • Keep the old 82-day rule out of your answer.

Practice questions from Limited Liability Partnership

Partners, Designated Partners and LLP Agreement in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Partners, Designated Partners and LLP Agreement: frequently asked questions

Who can become a partner in an LLP?

Subscribers to the incorporation document become partners on incorporation. Any other person becomes a partner by and in accordance with the LLP agreement, as per Section 22.

What is the eligibility of a designated partner?

The LLP needs at least two individual designated partners, and at least one must be resident in India. An individual must give prior consent and obtain a DPIN. The Central Government may also prescribe further conditions.

What happens if the LLP agreement is silent on a matter?

The mutual rights and duties on that matter are determined by the First Schedule under Section 23(4). The agreement always takes priority where it speaks.

Does the LLP agreement have to be filed?

Yes. Section 23(2) requires the agreement and any changes made to it to be filed with the Registrar in the prescribed form, manner and fee.

Can a partner become or stop being a designated partner later?

Yes. Under Section 7(2), a partner can become or cease to be a designated partner in accordance with the LLP agreement, subject to the minimum requirement in Section 7(1).