Govt directs LLPs to disclose their Beneficial Owners
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In a website notification, the ministry has asked designated partners in LLPs to be ready for the compliance requirements. Besides disclosure on significant beneficial ownership/owners, the notification also suggests individuals will have to limit their role as a partner to only a prescribed number of LLPs.
To be clear, Section 67 of the LLP Act allows the central government to issue a notification for extending provisions of the Companies Act to any LLP with or without a modification. The government had used this provision last year to extend powers for condonation of delay to any filings under the LLP Act as well.
The intent behind obtaining significant beneficial ownership declaration is to find out the real or beneficial owner in an entity. For instance, the law allows a body corporate to be a shareholder or a partner in a company or LLP respectively. But the ultimate control over such entities is generally exercised by an individual or a group of them. SBO declaration aims to find such beneficial owners.
While this requirement was introduced for companies in early 2018, it was fraught with implementation challenges. This had prompted the government to extend the deadline and then freeze it. Finally, a new set of rules were issued in 2019 but companies continued to have a lot of unanswered questions.
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