MCA Notifies LLP SBO Rules [Read Notification]

The Ministry of Corporate Affairs (MCA), vide notification no. G.S.R. 832(E) has notified the Limited Liability Partnership (Significant Beneficial Owners) Rules, 2023. The rules shall be applicable to any Limited Liability Partnership (LLP). It came into force on 10th November 2023, ie., publication of the notification in the official gazette.

A "significant beneficial owner" (SBO) in relation to a reporting limited liability partnership, means an individual who acting alone or together or through one or more persons or trust, possesses one or more of the following rights or entitlements in such reporting limited liability partnership, namely:-

(i) holds indirectly or together with any direct holdings, not less than ten percent of the contribution;

(ii) holds indirectly or together with any direct holdings, not less than ten percent of voting rights in respect of the management or policy decisions in such limited liability partnership;

(iii) has right to receive or participate in not less than ten percent of the total distributable profits, or any other distribution, in a financial year through indirect holdings alone or together with any direct holdings;

(iv) has right to exercise or actually exercises, significant influence or control, in any manner other than through direct-holdings alone.

The definition is attached with few explanations.

As per Rule 4, Every reporting limited liability partnership shall take necessary steps to find out if there is any individual who is a significant beneficial owner, in relation to that reporting limited liability partnership, and if so, identify him and cause such individual to make a declaration in Form No. LLP BEN-1.

According to Rule 5, on the commencement of these rules, every individual who is a significant beneficial owner in a reporting limited liability partnership, shall file a declaration in Form No. LLP BEN-1 to the reporting limited liability partnership within ninety days from such commencement.

Non-Applicability of the Rules

These rules shall not apply to the extent the contribution of the reporting limited liability partnership is held by.-

(a) the Central Government, State Government or any local authority;

(b) (i) a reporting limited liability partnership, or

(ii) a body corporate, or

(iii) an entity,

controlled by the Central Government or by one or more State Government, or partly by the Central Government and partly by one or more State Government;

(c) an investment vehicle registered with, and regulated by the Securities and Exchange Board of India, such as mutual funds, alternative investment funds (AIF), Real Estate Investment Trusts (REITs), Infrastructure Investment Trust (lnVITs).

(d) an investment vehicle regulated by the Reserve Bank of India, or the Insurance Regulatory and Development Authority of India, or the Pension Fund Regulatory and Development Authority.

To Read the full text of the Order CLICK HERE

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