Indian Government Tightens Disclosure Rules for Limited Liability Partnerships

October 30, 2023

The Indian government has implemented stricter disclosure rules for Limited Liability Partnerships (LLPs), mandating the maintenance of a register of partners that includes details of their beneficial interests and contributions, both tangible and intangible.

New Regulatory Framework

The Limited Liability Partnership (Third Amendment) Rules, 2023, issued by the Ministry of Corporate Affairs (MCA), came into effect on October 28, 2023. According to these rules, even newly established LLPs must maintain a register of partners at their registered offices within 30 days of incorporation.

Promoting Transparency

This regulatory shift aims to enhance transparency in the operations of LLPs in India, particularly as there has been a surge in the incorporation of companies and partnership firms in the current fiscal year.

Contents of the Register

The register of partners must contain the following details:

Professional and Personal Information: Including office address, email ID, and permanent account number.
Nature of Contributions: Indicating tangible, intangible, movable, immovable, or other benefits brought to the LLP. This encompasses money, promissory notes, agreements to contribute cash or property, and contracts for services with monetary value, along with any other interests.
Updates: Any changes to the register entries must be updated within seven days.

Beneficial Interest Declarations

Partners without any beneficial interest in contributions must declare this to the LLP within 30 days of their inclusion in the register of partners.
Individuals who are not listed as partners but possess beneficial interests in the LLP’s contributions must declare their interest within 30 days. They need to specify the nature of their interest and provide details of the partners in whose names their contributions are registered in the LLP’s books.
The LLP is responsible for recording partner declarations in the register within 30 days.
Each LLP must designate a partner who will be responsible for submitting information regarding beneficial interests to the Registrar of Companies or other authorized offices. Until such a partner is designated, every partner is individually responsible for furnishing this information.

Record-Breaking Business Incorporations

This regulatory development coincides with a record number of company and LLP incorporations in the first half of the fiscal year. India witnessed the addition of 120,966 companies and LLPs between April and September, marking an 11.4% increase from the previous year. This surge reflects growing optimism about India’s business environment.

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