LLP (SIGNIFICANT BENFICIAL OWNERS) RULES, 2023

LIMITED LIABILITY PARTNERSHIP (SIGNIFICANT BENEFICIAL OWNERS) RULES, 2023 

Ministry of Corporate Affairs issued a Notification vide notification no. G.S.R. 832(E) regarding Limited Liability Partnership (Significant Beneficial Owners) Rules, 2023 on 9th Nov 2023, requiring Limited Liability Partnership to identify & Report details of Significant Beneficial Owner to Ministry of Corporate Affairs.

A.    LIMITED LIABILITY PARTNERSHIP (SIGNIFICANT BENEFICIAL OWNERS) RULES, 2023 NON-APPLICABILITY

• LLP Significant Beneficial Owners Rule came into force on 10th Nov 2023, ie., publication of the Ministry of Corporate Affairs notification in the official gazette.

The Significant Beneficial Owners Rules shall not applicable to:

• contribution held by the State & Central Govt or local
• Limited Liability Partnership’s /entities controlled by the State & Central Govt or both;
  • Investment vehicles regulated by the Reserve Bank of India or Insurance Regulatory and Development Authority or Pension Fund Regulatory and Development Authority or
  • registered with the Securities and Exchange Board of India,

B.    Duties of the Reporting Limited Liability Partnership

• Identification of Significant Beneficial Owners, if any, and cause such individual to make a Declaration in Form LLP BEN-1.
• Notice to identified Significant Beneficial Owners in Form LLP BEN-4, seeking prescribed information. The Significant Beneficial Owners to file information within ninety days of start of New Ministry of Corporate Affairs Significant Beneficial Owners Rules.
• Submission of Significant Beneficial Owners Return in Form LLP BEN-2 with Registrar of Companies within thirty days of receipt of the declaration from the Significant Beneficial Owners.
• Maintenance of Register of Significant Beneficial Owners in Form LLP BEN-3.

C.    Important Definitions & Provisions of Limited Liability Partnership (Significant Beneficial Owners) Rules, 2023

Holding of indirect interest in a Limited Liability Partnership

• According to Ministry of Corporate Affairs – Limited Liability Partnership (Significant Beneficial Owners) Rules, 2023 Rule 3(k), a Significant Beneficial Owners means an individual having one or more of the below rights or entitlements in the reporting Limited Liability Partnership, acting alone or via one or more persons:

• Has right to exercise or exercises, significant influence or control, in any manner other than through direct holdings alone or holds, indirectly or together with any direct holdings not less than Ten percentage of the
• contribution;

• voting rights in management or policy
• of the right to receive or participate of the total distributable profits or any other distribution in a financial year
  • An individual shall be considered to hold a right or entitlement indirectly in the reporting Limited Liability Partnership, if he satisfies any of the following below condition:-
• where the partner of the reporting Limited Liability Partnership is a
  • body corporate other than an Limited Liability Partnership, and the individual holds majority stake
    • in that partner, or
    • the ultimate holding company of that
  • Hindu Undivided Family & individual is the Karta of such Hindu Undivided Family
  • Partnership entity and the individual
    • Is a partner or
    • Holds majority stake in the
      • ultimate holding company of the body corporate which is a partner of the partnership entity
      • body corporate which is a partner of such partnership entity

• Pooled investment vehicle or entity controlled by the pooled investment vehicle based in the Member State of Financial Action Task Force on Money Laundering and the Securities Market Regulator in such Member State is a member of International Organization of Securities Commissions and the individual is a
  • Investment Manager
  • General Partner or
  • Chief Executive Officers where Investment Manager of such pooled vehicle is a Body Corporate or Partnership Entity
  • Based in a jurisdiction who does not fulfil the requirements provided above; provisions of sub-para (a)-(d) above shall apply.

• Trust and the individual is a
  • author or settlor (in case of a revocable trust)
  • beneficiary (in case of a specific trust)
  • trustee (in case of a discretionary trust or a charitable trust)

Holding of Direct Interest in Limited Liability Partnership

• An individual shall not be considered an Significant Beneficial Owners if he/she directly holds any rights or entitlements in following manner:
  • Contribution in the reporting Limited Liability Partnership, representing such right or entitlement, is held in the name of the individual; or
  • The individual holds or acquires a beneficial interest in the contribution of the reporting Limited Liability Partnership under Rule 228(2) of the Limited Liability Partnership Rules, 2009 and has made a declaration in this regard to the reporting Limited Liability Partnership.

Complete SEBI Circular on LLP (SIGNIFICANT BENEFICIAL OWNERS) RULES, 2023: 

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