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Who are the designated members of an LLP? How many designated members an LLP needs to have? When a limited liability partnership is formed, the members are the people named on the incorporation document; these are the owners and investors of the business. The mutual rights and duties of the members of a limited liability partnership are governed by the limited liability partnership agreement or by law.
Every member is the agent of the limited liability partnership and the partnership is bound by anything done by a member on its behalf, unless the member had no authority to act in that capacity on behalf of the limited liability partnership, or if the person with whom the member is dealing knows that the member had no authority to act or had no knowledge of his or her membership of the limited liability partnership.
Designated members have the same rights and duties towards the limited liability partnership as any other member; however, the law also places extra responsibilities on designated members. In particular, designated members are responsible for: -
Designated members are accountable in law for failing to carry out these legal responsibilities.
A shadow member is a member on whose orders, supervisions and directions the other members are accustomed to undertaking. An individual solely providing professional service & advice is unlikely to be treated as a shadow member. A shadow member often acts behind the scenes, which may be because there is a reason why they cannot be formally appointed or named to public.