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Partner is a common word for anyone who puts money into a business with another person and agrees to share both profits and losses, as well as risks and rewards. On the other hand, as the name suggests, the designated partner is the one who the other partners choose to be in charge of following the rules of the LLP Act.
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In a general partnership, two or more people work together to start a legal business and agree to share both profits and losses. That means that in a partnership business, the partners share ownership of the business.
LLPs are a relatively new way to run a business. It combines the best parts of Partnership and Company.
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BASIS FOR COMPARISON | PARTNER | DESIGNATED PARTNER |
---|---|---|
Meaning | When two or more persons enter into partnership business with one another, they are individually called as partners. | Designated Partner refers to any partner who is appointed as such, in the incorporation document, at the time of LLP registration. |
Context | General Partnership and Limited Liability Partnership | Limited Liability Partnership only. |
Act as | Agent | Agent as well as Directors |
Eligibility Criteria | Any person or body corporate can become a partner. | Only individuals can be selected or appointed as a designated partner. |
Duties, Rights and Liabilities | Partner’s duties, rights and liabilities are stated in Partnership Deed in case of General Partnership and in LLP Agreement in case of Limited Liability Partnership. | The duties, rights and liabilities of designated partners are stated in the LLP Agreement. |
Accountability for regulatory and legal compliance | No | Yes |
Identification Number | No requirement for obtaining an identification number. | Every designated partner is required to obtain a DPIN (Designated Partner Identification Number). |
Partner means any person or business that joins a business partnership as a member to share the profits and losses in an agreed-upon way. So, in a partnership business, a partner is a part-owner of the business.
Also, the partners are required to run the business in a way that benefits everyone, to be fair and honest with each other, and to give true accounts and full information of all the material things that could affect any partner.
There are seven different kinds of partners, which are:
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The Limited Liability Partnership Act brings up the idea of a “designated partner“. A designated partner does the same work as a company’s directors but has more rights and privileges.
All of the LLP’s “designated partners” must get a “Designated Partner Identification Number,” or “DPIN.” At the time of registration, at least two people must be named as designated partners on the document. If nothing else is said, the partner whose name comes first in the declaration’s statement of partners will be considered the designated partner.
Also, in an LLP, any partner can be given the role of “designated partner,” as long as the other partners agree.
According to the Limited Liability Partnership Act of 2008, at least two partners must be named in the incorporation document as “designated partners.” These “designated partners” must be people. If no one is named, however, every partner in the LLP will be considered a designated partner.
Also, one of the two people named as partners should live in Dubai. But if all of the partners in an LLP are companies, or if one or more of the partners are both individuals and companies, then at least two people who joined the LLP as partners or nominees of the company can be named as designated partners.
The LLP agreement can let the role of designated partner be looked at and changed so that each partner can take part.
The following are important points that show the difference between a partner and a designated partner:
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So, the word “partner” can be used in a general way to refer to someone who is part of a business partnership. But a designated partner is the one who has been given permission by the other partners to do the job. This person is subject to review and change.
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