The Ministry of Corporate Affairs, the Government of India, in its General Circular No. 02/2016 dated 15.01.2016, clarified the position of partners and designated partners (DP) in Limited Liability Partnership (LLP). As per Section 5 of LLP Act, 2008, only an individual or body corporate can be a partner or DP in LLP. After applications from Hindu Undivided Family (HUF)/Karta of such families surfaced for becoming partners or DP in LLPs, the Ministry clarified that HUF or its Karta cannot become a partner or DP in LLPs.
A "body corporate" for this purpose is defined in section 2(11) of the Companies Act, 2013 which states that, any company incorporated outside India can be a body corporate provided it is not a co-operative society registered under the Co-operative Societies Act and any other body corporate as specified by the Central Government by way of notification. A notification in this regard was issued by the Ministry vide its General Circular No. 13/2013 dated 29.01.2015 in consultation with Ministry of Law. However, since General Circular No. 13/2013 mentioned about 'designated partner' but did not mention about 'partner', therefore, the present General Circular No. 02/2016 was released.
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