Mohan has been appointed as a passive partner in the Limited Liability Partnership (LLP). He seeks your advice on the responsibilities of designated partner where the LLP has contravened the provisions of LLP Act. Referr

The passive partner would be liable for all the penalties and fines imposed on LLP as there is no distinct provision which differentiates between active partner and passive partner. According to Section 8 of LLP Act, 2008 designated partner shall be liable to all penalties imposed on the limited liability partnership for any contravention of those provisions. The designated partner would be liable to all penalties imposed on the LLP for the contravention of the provisions of the Act and as such the designated partner would be required to pay all the monetary fines imposed on the LLP. Further in the following instances apart from the LLP, the designated partner would also be imposed monetary penalties under the Act: For non-compliance with the directions of the Central Government for change of name under Section 17 of the Act, For non-maintenance of books of accounts, non-filing of accounts, duly audited where such an audit is mandatory under Section 34 of the Act, For non-filing of the annual return of the LLP with the Registrar under Section 35 of the Act. Mohan can sign cheques on behalf of the LLP, if so authority of the LLP.