Register of Partners and Beneficial Interest in Contribution of the LLP [Expanding Corporate Governance Net]
Introduction: The Ministry of Corporate Affairs introduced the Limited Liability Partnership (Third Amendment) Rules, 2023, bringing significant changes to corporate governance. This article delves into the newly inserted Rules 22A and 22B, focusing on the Register of Partners and Declaration of Beneficial Interest in Contribution.
DETAILS OF NOTIFICATION & ITS INTERPETATION:
- As per the Notification dated 27th October, 2023, the Ministry of Corporate Affairs [MCA] has introduced the Limited Liability Partnership (Third Amendment) Rules, 2023 [herein after referred to as ‘Amendment Rule’];
- Through such Amendment Rule, MCA has inserted 2 (Two) Rules after Rule 22 of Limited Liability Partnership Rules, 2009 [hereinafter referred to as ‘Existing Rules’] that is Rule 22A [Register of Partners] & Rule 22B [Declaration in respect of beneficial interest in any contribution] in order to constrict the Corporate Governance of the Limited Liability Partnerships [LLP(s)];
Interpretation of Rule 22A [Register of Partners]:
- Every newly incorporated LLP or in the case of existing LLP shall maintain the Register of Partners in Form 4A within a period of 30 (Thirty) days of the commencement of this Amendment Rule. Further, such Notification has also provided certain content which shall be contained in such Register of Partner which are as follows;
✔ Name of the Partner;
✔ Address (Registered Office Address in case the Member is a Body Corporate);
✔ E-Mail Address;
✔ Permanent Account Number or Corporate Identification Number or Unique Identification Number, if any;
✔ Father or Mother or Spouse’s Name;
✔ Occupation/ Status/ Nationality/ Name and Address of nominee;
✔ Date of Becoming Partner;
✔ Date of Cessation;
✔ Amount and nature of contribution (indicating tangible, intangible, movable, immovable or other benefit to the Limited Liability Partnership, including money, promissory notes, other agreements to contribute cash or property, and contracts for services performed or to be performed) with monetary value; and
✔ any other interest, if any,
- It shall be noted that the entries in the Register of Partners shall be made in within 7 (Seven) days from the date of any change made in the contribution amount, or in name and details of the partners in the Limited Liability Partnership agreement, or in cases of cessation of partnership interest;
- If any rectification is made in the register maintained under this rule by the Limited Liability Partnership pursuant to any order passed by the competent authority under any law, the necessary reference of such order shall be indicated in the respective register and for reasons to be recorded in writing.
Interpretation of Rule 22B [Declaration in respect of beneficial interest in any contribution]:
- As per Rule 22B of such Amendment Rule, a person whose name is entered in the Register of Partner [hereinafter referred to as ‘Registered Partner’] as maintained as per Rule 22A of the Amendment Rule but such Person does not hold any BENEFICIAL INTEREST FULLY or PARTIALLY in contribution then in such case such Person shall file a declaration with the LLP in Form 4B to that effect within a period of 30 (Thirty) from the date on which his name [such Person’s name] is entered in the Register of Partners specifying the name and other particulars of the person who actually holds any beneficial interest in such contributions;
- It is also important to note that where any change(s) occurs in the beneficial interest in such contributions the such Registered Partner shall, within a period of 30 (Thirty) days from the date of such change and shall file a declaration to that effect and file the same with the LLP in Form 4B;
- It shall be noted that every person who acquires or holds a BENEFICIAL INTEREST [hereinafter referred to as ‘Beneficial Partner’] in the contribution of a Limited Liability Partnership but the name of such Person is not registered in the Register of Partners then such Partner shall file a declaration in Form 4C disclosing such interest with the LLP within 30 (Thirty) Days after acquiring such beneficial interest in the contribution of the LLP specifying the nature of his interest, particulars of the partner in whose name the contribution stand registered in the books of the LLP;
- It is important to note that where any change occurs in the beneficial interest in such contribution, such Beneficial Partner shall, within a period of 30 (Thirty days) from the date of such change, make a declaration of such change to the LLP in Form 4C.
- EXEMPTION: If the beneficial interest of Registered Partner is limited to the contribution stated against his name in the register of partners but he does not hold beneficial interest in contribution against any other Registered Partner, then, he shall not be required to file such declaration.
- In the case where the LLP receives the Declaration in the Form 4B/ 4C the such LLP shall record such declarations in the Register of Partner as maintained under Rule 22A of the Amendment Rule (Amendment Rule as of now) and shall file such declarations with the Registrar of Companies (ROC) in Form 4D within a period of 30 (Thirty) Days from the date of receipt of such declaration(s);
- It is also important to note that the MCA has imposed a responsibility on any one Designated Partner [as mutually decided by all Designated Partners] for furnishing of and extending co-operation for providing, information with respect to beneficial interest in contribution in LLP to the Registrar or any other officer authorised by the Central Government and shall file information of such Designated Partner with the Registrar in Form 4. However, until a Designated Partner is specified as mentioned here, every Designated Partner shall be deemed to be responsible for furnishing of, and extending co-operation for providing, information with respect to beneficial interest in contribution under this amendment Rule.
➣ Formats of following Forms are provided in the Notification;
✔ Form 4 [Notice of appointment, cessation, change in name/ address/designation of a designated partner or partner and consent to become a partner/designated partner/declaration of designated partner with respect to beneficial interest];
✔ Form 4A [Register of Partners];
✔ Form 4B [Declaration by the Registered Partner who does not hold the beneficial interest in the Contribution];
✔ Form 4C [Declaration by the Partner who holds or acquires beneficial interest in the Contribution but whose name is not entered in the Register of Partners]
✔ Form 4D [Return to the Registrar in respect of declaration of beneficial interest in contribution received by the LLP]
→ MCA has introduced Rule 22B in consonance with Section 89 read Rule 9 of the Companies (Management and Administration) Rules, 2014 of the Companies Act, 2013.
LINK OF NOTIFICATION:
LLP (Third Amendment) Rules, 2023: Register of Partners & Beneficial Interest
- EFFECTIVE DATE:
- Such Amendment shall come into force on the date of publication of such Notification in the Official Gazette.
Conclusion: The LLP Amendment Rules 2023 bring a robust framework for governance, emphasizing transparency in partner details and beneficial interests. Adhering to the prescribed forms and timelines is crucial for LLPs to stay compliant. As the rules align with Companies Act, understanding the broader regulatory context is advisable.
*****
Disclaimer: The entire contents of this article have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although utmost care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a piece of professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.
Author Bio
