The government tightens rules for LLPs to Enhance Transparency

The government has made the rules stricter for limited liability partnerships (LLPs). Now, LLPs must keep a record of their partners, including their contributions and interests. Even new LLPs need to maintain this record within 30 days of starting operation, as per the Limited Liability Partnership (Third Amendment) Rules, 2023, officially announced by the Ministry of Corporate Affairs (MCA), which became effective on October 28. This change is to increase transparency in how LLPs operate in the country, and it comes at a time when a record number of companies and partnership firms are being formed this fiscal year.

The rules say that the partner record must include information about contributions and details of partners, like their office address, email, and permanent account number. Contributions can be in various forms, including money, agreements, services, and other interests. If there are any changes, they must be updated within seven days. Partners without any beneficial interest in contributions must report it within 30 days of being added to the partner record. Those with beneficial interests but not listed as partners must also report their interests and the partner details within 30 days. Each LLP must designate a partner responsible for sharing information about beneficial interests with the Registrar of Companies or authorised offices. Until that happens, every partner is responsible for providing this information.