MCA Update on LLP

On October 27, 2023 MCA bring a notification on LLP

The Limited Liability Partnership (Third Amendment) Rules, 2023.

(A) Register of Partners

Every limited liability partnership (LLP) shall, from the date of its incorporation, maintain a register of its partners in Form 4A which shall be kept at the registered office of the limited liability partnership and for the existing LLP shall maintain the register within 30 days of commencement of this rule.

Form 4A will include the followings:

a) 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; Unique Identification Number, if any; father or mother or spouse’s name; occupation; status; Nationality; name and address of nominee;

(b) date of becoming partner;

(c) date of cessation;

(d) 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

(e) any other interest, if any, Compliances Within 30 days since applicability of the said rules, every LLPs shall prepare register in form 4A format since incorporation.

B) Declaration in respect of beneficial interest in any contribution.

A person whose name is entered in the register of partners of a Limited Liability Partnership but does not hold any beneficial interest fully or partly in contribution such person shall intimate to LLP in form 4B within 30 days of becoming a partner.

A person who holds or acquires a beneficial interest in contribution of a Limited Liability Partnership but his name is not registered in the register of partners shall intimate the LLP in form 4C within 30 days to LLP.
LLP shall file the form 4D within 30 days from the date of receipt of declaration with the ROC.

LLP will have to designate a partner to who shall be responsible for furnishing of and extending co-operation for providing, information with respect to beneficial interest in contribution in Limited Liability Partnership 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.

Compliances:

LLP form 4D and LLP form 4 with the ROC.

Summary:

The proposed amendments will have the following key impacts:

1) Streamlined stamp duty for issuance of securities: The government will be able to streamline stamp duty for the issuance of any securities, such as shares, debentures, and bonds. This will make it easier and more affordable for companies to raise capital.
2) Accountability for checking beneficial ownership: A specific person will be responsible for checking and verifying the beneficial ownership details of partners and shareholders. This will help to ensure that companies are transparent and accountable, and that their ownership is not hidden behind complex structures.
3)Restriction on issuance of share warrants in public companies: Public companies will be restricted from issuing share warrants. Share warrants are certificates that give the holder the right to purchase shares at a later date. The restriction on share warrants is designed to reduce the risk of market manipulation and insider trading.
4)Increased compliance burden for LLPs: LLPs will face an increased compliance burden, as the proposed amendments will introduce new requirements for them.

Overall, the proposed amendments are likely to have a impact on companies and LLP. The government’s goal is to improve transparency and accountability, but the new regulations may also increase the cost and complexity of doing business.