LLP
compliance set to get stricter as MCA applies sections of Companies Act to LLP
Act
The Limited Liability Partnership and to better regulate
designated partners, the ministry of corporate affairs has decided to extend
certain sections of the Companies Act to the LLP Act.
A total of eight sections relating to the register of
significant beneficial owners, disqualification of directors, conduct of
inquiries, inspections and non-cognizable offences will soon be applicable to
LLPs, the MCA said in an intimidation on April 1, Thursday.
The changes are to fill the gaps in the LLP Act by applying
the sections of the Companies Act to LLPs. It has been done in the past, A
senior authorities official stated. These sections will likely be modified to
match into the Limited Liability
partnership Act, relating to which a notification is predicted to be out
quickly, limited liability partnerships, partners and designated partners
thereof are advised to take note of the same for appropriate action, the
ministry stated.
One significant change in the application of the clause
triggering disqualification of directors of a company that has not complied
with filing for three years to LLPs.
Clauses of Section 164 of the Companies Act, which state
that a director of a company which has defaulted on filing financial statements
or annual returns for three consecutive years will be disqualified as director,
shall apply to LLPs.
Similarly, those who chose to form LLPs to avoid disclosure
of beneficial ownership will now have to disclose this information as clauses
of Section 90 of the Companies Act will also apply to LLPs.
Section 67 of the LLP Act allows the government to apply
sections of the Companies Act to the LLP Act by way of notification.
However, since the move is in the nature of amendments to
the LLP Act, Parliament’s approval will be required as the notification must be
placed in both Houses, the official said.