Page 58 - Banking Finance December 2023

FEATURES

LLPs are required to report to the RoC on

the "Significant Beneficial Owner"

T he Registrar of Companies (RoC) will now require is considered a "Significant Beneficial Owner" in an LLP if

a report from a Limited Liability Partnership Firm
they possess one or more of the following four rights or
entitlements: (i) they hold, indirectly or jointly with any direct
(LLP) regarding its Significant Beneficial Owner (s)
to be submitted within 30 days of the date on
indirectly or jointly with any direct holdings, not less than
which the individual made the statement regarding having holdings, not less than 10% of the contribution; (ii) they hold,
or obtaining that status. 10% of the voting rights regarding management or policy
decisions;
With effect from November 10, 2023, the Limited Liability
Partnership (Significant Beneficial Owners) Rules have been Adaptable Choice
notified by the Corporate Affairs Ministry. These consist of An LLP is a cross between a limited liability company and a
the reporting schedule and definition. With this most recent partnership. It can be created with indirect holdings alone
action, the LLP is indicating that it intends to determine the or in combination with direct holdings, and it can receive or
genuine, or "beneficial," owner's interest in and control over participate in distributions of at least 10% of the total
the contributions made by individuals and partners.
distributable profits, or any other distribution, in a given
An LLP is a cross between a partnership and a limited liability fiscal year. Additionally, it can be created with the right to
company. It has the benefit of being a body corporate, but exercise significant influence or control in any way other than
it also has the advantage that the LLP Agreement, rather through direct holdings alone.
than any statute, regulates internal governance and
Each reporting limited liability partnership (LLP) shall
partner-LLP interactions. A partner has been assigned to ascertain if any person is a Significant Beneficial Owner
oversee compliance.
within the organization. Such a person must provide a
Owner of Benefit declaration in Form No. LLP BEN1 to the reporting LLP no
later than November 10, which is 90 days after the new
The new regulations state that an individual acting alone,
regulations take effect. After receiving the information, the
jointly, through one or more individuals, or through a trust,
firm has 30 days from the date of the declaration to submit
it to the RoC.
Any change in the person's status as a Significant Beneficial
Owner must also be reported to the LLP firm within 30 days
of the change occurring.

Exclusivity
According to the notification, the regulations would not
apply to the amount of contributions made by reporting
limited liability partnerships (LLPs) owned by the government
or entities under government control, mutual funds,
alternative investment funds, real estate investment trusts,
infrastructure investment trusts, or investment vehicles
subject to RBI, IRDAI, or PFRDA regulation. (Refer to
Business Line)

52 | 2023 | DECEMBER | BANKING FINANCE