The Ministry of Corporate Affairs (MCA) has issued a significant compliance alert with the notification of three key amendments on the 27th of October, 2023. These amendments encompass the LLP (Third Amendment) Rules, 2023, the Companies (Management and Administration) Second Amendment Rules, 2023, and the Companies (Prospectus & Allotment of Securities) Second Amendment Rules, 2023. This article provides a detailed analysis of the provisions in these notifications to help companies and LLPs ensure compliance.
A. Beneficial Interest and Register of Partners for LLPs:
♦ Beneficial Interest in Contributions | Rule 22B:
1. Registered Partners: LLPs’ registered partners without beneficial interest must file Form 4B within 30 days of registration. Update changes within 30 days.
2. Beneficial Partners: Those with interest but not in the register must file Form 4C within 30 days of acquisition, updating changes promptly.
3. Designated Partner: LLPs must appoint a designated partner responsible for information about beneficial interests, filing details in Form 4.
4. LLP Compliance: LLPs record declarations in the Register of Partners and file Form 4D within 30 days of receipt.
♦ Register of Partners | Rule 22A:
1. LLPs must maintain a comprehensive Register of Partners (Form 4A) from incorporation.
2. Existing LLPs must set up the register within 30 days from the Limited Liability Partnership (Third Amendment) Rules, 2023.
3. Updates to the register within seven days of any changes in partner details or contributions per LLP agreement.
Source Notification: LLP (Third Amendment) Rules, 2023: Register of Partners & Beneficial Interest
B. Designation of Responsible Person (MGT-6):
- Every company must designate a responsible person for reporting beneficial interests in company shares.
- Default designation to company secretary, Managing Director, Manager, or a director, as applicable.
- Details of the designated person must be included in the Annual Return. Changes reported promptly in e-form GNL-2.
Source Notification: Companies (Management and Administration) Second Amendment Rules, 2023
C. Dematerialization of Securities for Private Companies:
- Private companies (excluding small companies) must issue and facilitate dematerialization of securities as per the Depositories Act, 1996.
- Non-small private companies as of 31st March 2023 must comply within 18 months of the financial year’s closure.
- Promoters, directors, and key personnel must dematerialize holdings before securities-related offers.
- Holders must ensure securities are in dematerialized form for transfers or subscriptions post-compliance.
- Important Deadline: Obtain ISIN by 30th September 2024.
- Certain companies may face challenges due to compliance costs.
These amendments underline MCA’s commitment to enhancing corporate governance and transparency. Companies and LLPs must remain vigilant and ensure they meet these compliance requirements in a timely manner.
Source Notification: Companies (Prospectus & Allotment of Securities) Second Amendment Rules, 2023
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About Author: Author is a Qualified Company Secretary, with over five years of comprehensive experience and knowledge in navigating complex Act, Rules and Regulations, including but not limited to The Companies Act, 2013, FEMA, LODR, PIT, SEBI ICDR and more. With a strong passion for law and ongoing pursuit of an LLB degree, possess a comprehensive understanding of legal principles and practices. Author can be connected at malhotrabhuvesh@gmail.com.
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Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. For legal advice, please consult with a Qualified Company Secretary familiar with the relevant laws and regulations. I make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the article or the information contained in it.
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