Jahanvi Agarwal
The Ministry of Corporate Affairs (MCA) has issued a compelling notification, G.S.R. 832(E) dated November 9, 2023, exercising its authority under section 79 of the Limited Liability Partnership Act, 2008. This notification brings into effect the Limited Liability Partnership (Significant Beneficial Owners) Rules, 2023, upon their publication in the Official Gazette. Aligned with Section 90 of the Companies Act, 2013, these rules are designed to elevate transparency and accountability by necessitating the disclosure of ultimate beneficial ownership and control structures in Limited Liability Partnerships (LLPs).
Representing a notable stride towards enhanced corporate governance, the LLP SBO Rules 2023 institute clear procedures for identifying and documenting beneficial ownership. As a result, LLPs are urged to expeditiously assess their ownership structures and ensure adherence to the stipulated timelines for Significant Beneficial Owner reporting. This regulatory framework is poised to mitigate the potential misuse of LLP structures for illicit activities such as money laundering and tax evasion.
The key provisions include the obligation for all LLPs to identify Significant Beneficial Owners, prompting their submission of declarations through Form LLP BEN-1. Existing SBOs are required to file declarations within 90 days of the rules’ commencement, while new SBOs must comply within 30 days. Following the receipt of declarations, LLPs must submit returns to the Registrar (Form LLP BEN-2) and maintain a register of Partners and Significant Beneficial Owners (Form LLP BEN-3).
Additionally, LLPs are mandated to issue notices (Form LLP BEN-4) to partners holding a stake of 10% or more, seeking information about beneficial interests. Non-compliance may result in restrictions on economic rights linked to contributions, as ordered by the competent authority.
The LLP SBO Rules 2023 signify a pivotal milestone in fortifying the disclosure framework for LLPs in India, urging proactive steps for timely compliance and the maintenance of updated registers of significant beneficial owners to instill a culture of transparency and trust in LLPs as robust business entities.