Enhancing Transparency: MCA Mandates LLPs to declare Registered and Beneficial Owners - MMJC

Introduction:

The concept of registered owner and beneficial owner within the context of a company has a well-established history. The Ministry of Corporate Affairs (MCA) has consistently underscored the importance of compliance with these provisions under the Companies Act of 2013. Recognizing the substantial relevance of these roles under various legal frameworks, the MCA has taken a noteworthy step by mandating that Limited Liability Partnerships (LLPs) declare both their registered and beneficial owners or partners within the LLP structure.

Insertion of new rules:

Through an amendment to LLP rules, MCA has mandated the LLPs to maintain a register of partners on the lines of register of members maintained under Companies Act. A new Rule 22A has been inserted in LLP rules which prescribes format for register and the timeline within which the LLP shall start maintaining register. As per this rule, the existing LLPs should maintain Register of Partners in form 4A within 30days from the effective date of this amendment, that is 28^th October 2023.

Further, newly inserted rule 22B says that, the partner whose name is entered in Register of Partner but who does not hold beneficial interest in the LLP, should disclose this fact to the LLP along with the details of the person who holds such interest within 30 days from entering of name in the Register of Partners. Similarly, the person who holds a beneficial interest but whose name is not entered in the Register of Partners should also give this disclosure to the LLP in form 4C within 30 days of acquiring such interest. Thereafter, the LLP should inform this fact relating to registered partner and beneficial partners to the ROC in form 4D. The amended provisions also provide for the format of these forms.

Conclusion:

MCA has extended its focus on enhancing transparency and accountability within business structures by introducing the concept of registered and beneficial partners for LLPs. This move aligns with the broader emphasis on defining ownership roles within various legal frameworks. By mandating the maintenance of a register of partners and the disclosure of beneficial interests, the MCA is driving LLPs toward increased compliance and clarity. The newly inserted rules under the LLP framework represent a significant step towards achieving these goals and fostering a more transparent and accountable business environment.

Link of the amendment is as follows:

https://www.mca.gov.in/bin/dms/getdocument?mds=VYVpE7YcJovnhBqcW9gtsw%253D%253D&type=open