[Opinion] Beneficial Interest and Significant Beneficial Owners for LLPs – A Shift to A More Transparent Corporate Reporting Regime

CS Akshita Surana – [2023] 156 taxmann.com 658 (Article)

Introduction

With a view to increase transparency in reporting for Limited Liability Partnerships (“the LLPs”), the Ministry of Corporate Affairs (“the MCA”) introduced Rule 22A and Rule 22B in the Limited Liability Partnership Rules, 2009 (“LLP Rules”) on 27/10/2023 and introduced the Limited Liability Partnership (Significant Beneficial Owners), Rules, 2023 (“LLP SBO Rules”) on 09/11/2023.

Until now, only the companies were subjected to identify their Significant Beneficial Owners (“SBOs”) and follow the related compliances under Sections 89(10) and 90 of Companies Act, 2013 (“the Act”) read with Companies (Significant Beneficial Owners) Rules, 2018 (“Company SBO Rules”). The same have now been extended to the LLPs through the LLP SBO Rules.

The amendments are expected to align the framework of identification and reporting of SBOs of LLPs with that of companies. As a result, all the existing LLPs and the SBOs identified pursuant to the LLP SBO Rules would be required to take necessary steps and make requisite disclosure of such significant beneficial ownership.

We shall discuss the important aspects of these amendments with the intention, purpose and compliance requirements one by one.
Introduction of Beneficial Interest for LLPs

Obligation of the LLP

As per Rule 22A of the LLP Rules the law puts an obligation upon the LLPs to maintain a register of partners of the LLP in the prescribed manner. The register shall be maintained in Form 4A and the same is to be kept at the registered office of the LLP. The timeline to maintain such register is as follows:

Any changes in the particulars of the partners shall be incorporated in the register within seven 7 days of such change.

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