Five close friends decided to form a Limited Liability Partnership firm 'EDUDED LLP' for educating poor children as non-profit organization. They…

Provisions of Law: (i) Whether EDUDED LLP can be formed for educating the poor as a non-profit organization? According to Section 11 of the Limited Liability Partnership Act, 2008, the essential requirement of forming LLP is carrying on a lawful business with a view to earn profit. EDUDED LLP cannot be formed for educating poor children as a non-profit organization. Conclusion: In view of the above, a LLP cannot be formed for charitable or non-economic purpose. Provisions of Law: (ii) Whether Mr. A and Mr. B can be appointed as designated partners in EDUDED LLP? Designated Partners (Section 7 of the Limited Liability Partnership Act, 2008): Every LLP shall have at least two designated partners who are individuals and at least one of them shall be a Resident in India. For the purpose of this section, the term Resident in India means a person who has stayed in India for a period of not less than 120 days during the financial year. Analysis: As EDUDED LLP cannot be formed because its purpose is for non-profit organization, the question of appointing Mr. A and Mr. B as designated partners does not arise. Note: However, if the EDUDED LLP can be formed, Mr. A and Mr. B cannot be appointed as designated partners in EDUDED LLP as both are Non-Resident and the condition that at least one designated partner must be a resident in India is not fulfilled. Therefore, one designated partner must be either Ms. C or Ms. D or Ms. E as all three of them are resident.