MCA has issued a Notification (dated Feb. 11, 2022) and has stated that certain provisions of Cos. Act, 2013 will be applicable to LLP (with modifications). This post relates to analysis of the said notification:
Provisions of maintaining register of SBO now applies to LLP. By the notification ‘company’ is substituted by ‘LLP’, ‘member’ is substituted by ‘partner’, ‘officer’ is substituted by ‘partner/designated partner’. Complex provisions of SBO are made so easily applicable for LLPs!! Without such substitution of words, MCA ought to have drafted a separate provision drafted for LLP as the amount capital contribution could be different than the voting rights in LLP. Not clear from MCA notification, whether Cos. SBO Rules are applicable for LLPs. Also, provisions similar to section 89(10) of Cos. Act, 2013 should have been applicable to LLPs.
Provisions of disqualification for appointment of directors now applies to designated partners of the LLPs. Sub-section (1) and (2) of section 164 of the Companies Act, 2013 are now applicable to LLPs. No reference to other provisions applicable to LLPs.
Provisions of number of directorships for directors in company are now applicable for number of LLPs in which a person can be DP (i.e. 20). There is no restriction for a person to be a partner in no. of LLPs.
Provisions relating to vacation of office of director are not applicable for DP of LLP. There is also a possibility provided where all DPs of LLP vacate their office (similar to Co. Act, 2013).
Central Govt. may if it is satisfied direct inspection of books and papers of LLP by inspector appointed by it for the purpose. The ROC or Inspector making an inspection or inquiry shall have all the powers as are vested in a civil suit in respect of certain matters (as prescribed).
Govt. has also introduced a provision for ‘Appeal to NCLAT’ in case of dissolution of LLP under section 75 of the LLP Act.
Provisions of section 439 of Cos. Act (relating to ‘offenses to be non-cognizable’) are now applicable to LLP with certain modifications.
Basically, all these provisions applicable to LLPs could have been drafted and made applicable to LLPs instead of substitution of words/phrases. Also, the LLP Act ought to have been amended for such significant amendments. There could have been many provisions of the Cos. Act, 2013 that could have been made applicable to LLPs. There ought to have been some clarity in applicability of provisions relating to RPTs under Cos. Act, 2013 to transaction between Co. and LLP.