Navigating Compliances On Significant Beneficial Ownership By Limited Liability Partnerships

Ministry of Corporate Affairs vide notification dated October 27, 2023 introduced the Limited Liability Amended Partnership Rules, 2023 modifying the existing Limited Liability Partnership Rules, 2009 to strengthen the mechanism for identifying individuals having beneficial interest in LLPs. Key Compliances under the LLP SBO Rules: Who qualifies as SBO: An individual who acting alone or together or through one or more persons or trust, has one or more of the following rights: An individual who acting alone or together or through one or more persons or trust, has one or more of the following rights: holds indirectly or together with any direct holdings, not less than 10% of the contribution in a reporting LLP; holds indirectly or together with any direct holdings, not less than 10% of voting rights in respect of management or policy decision; has right to receive or participate in not less than 10% of the total distributable profits, or any other distribution through indirect holdings alone or together with any direct holdings; and has right to exercise/ actually exercise, significant influence or control, in any manner other than through direct holdings alone. Declaration by SBO: SBO is meant to file a declaration to the reporting LLP within ninety days of the commencement of the Rules, deadline for which is soon approaching. Every individual who subsequently becomes a SBO or whose significant beneficial ownership further undergoes any change has to file a declaration to the reporting LLP within thirty days of acquiring SBO or any change thereto. Non-Applicability of the LLP SBO Rules: If the contribution of the reporting LLP is held by the Central Government, State Government or any local authority; a reporting LLP or a body corporate or entity controlled by the Central Government or by one or more of State Government or either partly by both of them; an investment vehicle registered with, and regulated by Securities and Exchange Board of India; or an investment vehicle regulated by Reserve Bank of India, or the Insurance Regulatory and Development Authority of India; or the Pension Fund Regulatory and Development Authority then the LLP SBO Rules will not be applicable.