New Era of Compliance for LLPs | Key Highlights of LLP Significant Beneficial Owners Rules, 2023

The Ministry of Corporate affairs vide Notification No. G.S.R…(E), Dated 09.11.2023 has notified Limited Liability Partnership (Significant Beneficial Owners) Rules, 2023. These rules to be applicable from date of their publication in the Official Gazette and shall be applicable to the Limited Liability Partnerships.

Let’s check out the key highlights of the newly introduced rules:

1. LLPs Mandated with Identification of Significant Beneficial Owners

As per the newly introduced rules, every reporting limited liability partnership shall take necessary steps to find out if there is any individual who is a significant beneficial owner, in relation to that reporting limited liability partnership, and if so, identify him and cause such individual to make a declaration in Form No. LLP BEN-1.

2. MCA prescribes deadlines for the ‘LLP BEN-I’

Following the commencement of these rules, the significant beneficial owners in a reporting LLP must submit Form No. LLP BEN-1 to the LLP within 90 days. Further, Individuals becoming significant beneficial owners or experiencing changes in their significant beneficial ownership must submit Form No. LLP BEN-1 to the reporting LLP within 30 days of acquiring or modifying their status.

Further, with the present notification, the limited liability partnership shall give notice in Form No. LLP BEN-4 seeking information

3. Compliance Requirement: LLPs Must File Form LLP BEN2 for Declarations Received

Upon receiving the declaration, the LLPs responsible for reporting must submit a return using Form No. LLP BEN-2 to the Registrar. This return should be filed within 30 days from the date of receiving the declaration.

4. Register of Significant Beneficial Owners in LLP (Form No. LLP BEN-3) and Inspection Guidelines

The LLPs are required to keep a register of significant beneficial owners using Form No. LLP BEN-3. This register will be available for inspection during regular business hours, at times agreed upon through the limited liability partnership agreement, or as determined by the partners of the limited liability partnership.

Further, the access to the register may be granted upon payment of a fee specified by the limited liability partnership, not to exceed fifty rupees for each inspection.

5. Empowering the Tribunal: Taking Action Against Non-Compliance and Unsatisfactory Information

Application to the Tribunal by the reporting limited liability partnership can be made in the following situations:

• When any person fails to provide the required information within the specified time as per Form No. LLP BEN-4 notice.
• When the information provided is unsatisfactory, as per subsection (7) of Section 90 of the Companies Act, 2013.The purpose of this application is to request the Tribunal to impose appropriate restrictions on the relevant contribution, which may include:
• Restrictions on the transfer of interest attached to the contribution in question;
• Suspension of the right to receive profits or any other distribution in relation to the contribution in question;
• Suspension of voting rights in relation to the contribution in question;
• Any other restrictions on some or all of the rights connected to the contribution in question.
  

  Conclusionary Note

  In conclusion, the Ministry of Corporate Affairs’ recent notification regarding the Limited Liability Partnership (Significant Beneficial Owners) Rules, 2023, has brought about significant changes in the regulatory landscape for LLPs. These rules mandate the identification of significant beneficial owners, the timely submission of declarations, and the maintenance of registers. They also empower the Tribunal to take action against non-compliance and unsatisfactory information.

  With these rules now in effect, reporting LLPs must proactively identify and engage with significant beneficial owners, ensuring compliance with the new regulations. The specified timelines for submissions and the mechanisms for inspections and enforcement further enhance transparency and accountability within the LLP framework.