MCA Introduces Key Amendments to LLP Rules: Enhanced Disclosure Requirements for Partners and Beneficial Interests

Posted On - 25 November, 2023 • By - King Stubb & Kasiva

The Ministry of Corporate Affairs (MCA) has issued the Limited Liability Partnership
(Third Amendment) Rules, 2023, effective from October 27, 2023, amending the Limited Liability Partnership Rules, 2009[1]. This amendment mandates all LLPs to maintain a partner register at their registered office, aligning with Companies Act, 2013, Section 89. LLPs must declare individuals holding an interest through a nominee or registered holder-beneficial owner relationship.

The Amended Rules highlight the following key provisions:

1. Register of Partners: LLPs are mandated to maintain a Form 4A partner register at their registered office from the date of incorporation. Existing LLPs, under the Limited Liability Partnership (Third Amendment) Rules, 2023, must establish this register within thirty days of the amendment. It encompasses partner information, including name, address, email, PAN or CIN, UID, parent or spouse’s name, occupation, status, nationality, nominee’s details, date of becoming a partner, cessation date, contribution details, and other interests. Updates must be made within seven days of changes, and rectifications should reference the competent authority’s order.

2. Declaration of Beneficial Interests: A person listed as a partner without holding beneficial interest (registered partner) in a Limited Liability Partnership must submit a Form 4B declaration within 30 days of entry, specifying the actual holder of beneficial interest. Any change in beneficial interest requires a Form 4B declaration within 30 days. Individuals with beneficial interest not registered as partners (beneficial partners) must file a Form 4C declaration within 30 days of acquiring interest, detailing the nature and particulars of the registered partner. Changes in beneficial interest by beneficial partners require a Form 4C declaration within 30 days. Further, upon declaration receipt, the LLP must record it in the partner register and file a Form 4D return with the Registrar within thirty days, including fees

3. Designated Partner Responsibility: A designated partner in the LLP must furnish beneficial interest information, submitting details via Form 4 within 30 days. In the absence of a specified partner, the existing designated partner is deemed responsible until a replacement is appointed.

This update aligns LLP compliance with Companies Act, 2013, enhancing transparency and accountability by aligning disclosure practices with those of companies. It underscores MCA’s commitment to reinforcing transparency and accountability within widely used LLPs.