LLP ON ALERTS – NEW DISCLOSURES NORMS MAY BE NOTIFIED SOON

LLP ON ALERTS - NEW DISCLOSURES NORMS MAY BE NOTIFIED SOON

The Ministry of Corporate Affairs (MCA) has taken several initiatives to achieve the vision of being a facilitator of world class governance of corporate and Mission of easing compliance, balancing interest of stakeholders and achieving excellence in service delivery. Ministry (MCA) has significantly contributed towards achieving the goal of Ease of Doing Business and is focused on improving corporate governance practices as the objectives of raising corporate governance standards and ease of doing business go hand in hand.

The government preparing to infuse a big dose of transparency over the ownership of these entities and introduce a simpler penalty regime. The ministry of corporate affairs is expected . may to notify a key disclosure requirement for LLPs soon and may include the followings:

1. Disclosure to mandate to report the ultimate natural person behind these business vehicles.
2. This disclosure requirement would be implemented with prospective effect.
3. transparency over the ownership
4. Introduction of a simpler penalty regime
5. limit the number of LLPs in which a person can be a ‘designated partner’.
6. A separate notification, which is also expected later this month, will give effect to the decriminalization of LLP Act cleared by Parliament.
7. The LLP Act amendment reduced the number of penal provisions from 24 to 22 and decriminalized 12 provisions.

These changes together would improve transparency into the affairs of the business, improve ease of doing business and will improve corporate governance.

The move to scale up transparency requirements of LLPs comes at a time the International Consortium of Investigative Journalists (ICIJ) has shown in the Pandora papers investigation that wealthy elites from more than 200 countries and territories, including some from India, have used shell entities to hide assets in low tax jurisdictions. Low tax compliance has been a regulatory headache for India for long, which forced the government to renegotiate bilateral tax treaties and sign automatic information exchange deals with foreign governments. Disclosure of assets linked to a person enables the authorities to see whether these are proportionate to the income that is reported.

Source: https://www.livemint.com/news/india/government-prepares-to-make-llp-ownership-transparent-this-month-11633893241968.html

Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.

CS LALIT RAJPUT

He has contributed in ICAI, ICSI and MCCI and other various Newsletters. He is also a speaker at various platforms including seminars / webinars.

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