Reporting Beneficial Interests in LLP | Third Amendment Rules of 2023

LLP (Third Amendment) Rules, 2023 specifies the Maintenance of the Register of Partners and Declaration regarding beneficial interests. This Amendment has introduced the need to maintain the Register of Partners at the Registered office and they are required to declare the names of the persons of the LLP holding interest in the LLP by way of contribution through a nominee or registered holder.

Applicability of the Rules:

The LLP Amendment Rule 2023 shall apply to :-

Registered Partner:- A person who doesn’t hold any interest, fully or partly, in the contribution but whose name is entered in the Register of Partners.

Beneficial Partner:- Person who holds beneficial interest in the contribution, but whose name is not entered in the Register of Partners.

Registered Partner

• LLP’s are required to maintain Register of partners in Form 4A at the Registered office of the LLP which is to be made from the date of Incorporation incase of any proposed Incorporation of LLP and within a period of 30 days from the date of commencement of the Amended Rules incase of the company already registered.

• Entries in the Register must be made within 7 days of any change.

• Details of any Beneficial owner to be made in the Register in form 4B and 4C within 30 days of such change.

• The Register of partner must contain the following particulars. They are:-
  • Name of partner, address, email address, PAN or CIN, Unique Identification Number (UIN) if any, father or mother or spouse’s name, occupation, status, nationality, name and address of the nominee.
  • Date of becoming a partner
  • Date of cessation
  • Amount and nature of contribution (indicating tangible, intangible, movable, immovable or other benefit to the LLP 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.

Beneficial Partner

When a Partner is the actual owner of the contribution. He is entitled to all the beneficial interest on such contribution. Beneficial interest means the right to receive benefits on contributions held by another party.

Declaration Regarding Beneficial Interests In Any Contribution:-

This Rule makes it mandatory to declare interest in the contribution made.
Registered Partner:- Person whose doesn’t hold any interest , fully or partly, in the contribution but whose name is entered in the Register of Partners.
Beneficial Partner:- Person who holds beneficial interest in the contribution, but whose name is not entered in the Register of Partners.

• The Registered Partner and the Beneficial Partner should declare in Form 4B and Form 4C within 30 days from the date on which the name is entered in the Register of Partners or the Beneficial interest acquired and any change relating to the above shall be declared within 30 days of such change.
• When the Declaration is received, the LLP shall inform the Registrar within 30 days from the date of receipt of such declaration. The Return of such declaration shall be filed in form 4D.
• The LLP shall authorise a Designated Partner who shall be responsible in furnishing, and providing Information regarding the declaration and beneficial interest in the contribution to the Registrar and any officer of Central Government and Details of such Designated Partner shall be filed in form 4.
• Unless a Designated Partner is authorised all the Designated Partners shall be held equally responsible for the above purposes.

Non-Compliance with the Amended Rule

In case of non-compliance, Section 74 of the LLP Act 2008 applies to the LLP which mentions any Partner, Designated Partner, or any other person who is in default will be liable:

• A Penalty of Rupees Five Thousand.
• In case of continuing contravention, a further penalty of Rupees one hundred for each day after the first during which the contravention continues and may extend to Rupees One Lakh.