By Rupin Chopra and Apalka Bareja
On October, 27, 2023, the Ministry of Corporate Affairs, had notified the Limited Liability Partnership (Third Amendment) Rules, 2023[1] . These rules mark a significant milestone in the evolution of Limited Liability regulations in India. These rules mandate the limited liability partnerships (LLPs) to maintain a register of partners, which is similar to the register of members maintained by the companies under the Companies Act, 2013. Additionally, as per the new rules, LLP is required to file a declaration regarding the beneficial interest in any contribution and to designate a partner to provide information to the registrar of companies. These amendments aim to streamline compliance requirements, promote transparency and ensuring that the LLPs remain competitive in the global market by aligning with international standards.
Limited Liability Partnership (Third Amendment) Rules, 2023- Key highlights
- Register of Partners: Rule 22A
In accordance with the new provision, Rule 22A, every LLP must maintain a register of its partners in Form 4A. In case, a LLP, is incorporated after the day on which the amendment comes into force, then it is required to maintain a register, from the date of its incorporation. As per the new rules, ever existing LLP, is mandated to maintain the register within 30 days from the date of enactment of these amendment.The register of partners must contain the particulars including personal details of the partner (such as name, address, PAN no., occupation etc.), date of becoming partner, date of cessation, amount and nature of contribution with monetary value, etc. Any change in the name and details of the partner, contribution amount or cessation of partnership interest is to be reflected within 7 days in the register. - Declaration of beneficial interest: Rule 22B
Any partner registered with the LLP but do not hold any beneficial interest in contribution (fully or partly), must submit a declaration using Form 4B to the LLP, furnishing the details of the person who actually holds beneficial interest, within 30 days from the date their name was entered in the register maintained by the LLP.Whereas, as per sub-rule (2) of the said rule, imposes an obligation on every person who has beneficial interest in the contribution of LLP and whose name is not registered in the register maintained by the LLP, to file a declaration in Form 4C to the LLP, within 30 days from the date on which they have acquired beneficial interest in the contribution of the LLP.After receiving the abovementioned declaration, the LLP must record it in the register of partners and submit a return in Form 4D to the registrar of companies within 30 days, along with relevant fees. - Appointment of Designated Partner: Rule 22B(4)
Rule 22B(4) of the amended LLP rules states that every LLP must appoint a designated partner who will be responsible for providing information related to the beneficial interest in contribution of the LLP to the registrar of companies. It further indicates that the abovementioned information needs to be submitted to the registrar of companies using Form 4. Additionally these rules also specify that until such a designated partner is appointed, each designated partner will be responsible for furnishing such information.
Conclusion
In conclusion, the LLP (Third Amendment) Rules, 2023, bring about important changes which aim at enhancing transparency, accountability and compliance with the Limited Liability Partnership Act, 2008. These amendments include requirements for partners without beneficial interest to file declaration promptly, maintenance of register of partners, appointment of designated partner responsible for disclosing information regarding beneficial interest and the filling of such information with the Registrar of Companies. Overall, these amendments contribute to strengthen the regulatory framework governing LLPs and promoting good governance practices within the corporate sector.
Ritvik Kashyap, Intern at S.S. Rana & Co. has assisted in the research of this Article.
[1] Available at: chrome -extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.mca.gov.in/bin/dms/getdocument?mds=VYVpE7YcJovnhBqcW9gtsw%253D%253D&type=open
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