Key changes introduced in LLP (Amendments) Rules, 2022

Introduction

In a notification dated March 4, 2022, the Ministry of Corporate Affairs published the "Limited Liability Partnership (Second Amendment) Rules, 2022." The amendment was proposed to update the existing Limited Liability Partnership Rules, 2009. The same will take effect the day after it is published in the official gazette.

Key changes introduced in LLP (Amendments) Rules, 2022

A. New web-based forms for the formation of LLP

• The LLP Amendments, 2022 have made all the LLP forms as web-based forms.
• Now, the LLP incorporation process should only be completed through web-based forms, just like the SPICe Plus Forms are for the incorporation of companies.
• The most significant modification brought by this amendment is that now every LLP is required to include Latitude and Longitude in the Address Block.
• The Digi Locker Database can be used to retrieve the Directors' information.

B. Need not to apply for PAN and TAN separate from the incorporation application

• The notification specifies that the Registrar shall issue the Certificate of Incorporation of an LLP in Form 16
• The Registrar must include the PAN (Permanent Account Number) and TAN (Tax Deduction Account Number) given by the Income Tax Department in the said Form 16.
• This means that, as is the case with companies, the incorporation of limited liability partnerships will now include the PAN and TAN applications, therefore LLPs need not apply for them separately.
• As a result, the LLPs will receive their PAN and TAN together with the official Certificate of Incorporation.

C. There should be 5 Designated Partners instead of 2 without DIN

• The significant change brought by the Limited Liability Partnership (Second Amendment) Rules, 2022 is that now the application for the allocation of DPIN shall be made by a maximum of 5 individuals in the Form FiLLiP.  This means that at the time of incorporation, there can now be five Designated Partners (without having a DIN) instead of just two.
• This is a massive step towards enabling the appointment of more than two Designated Partners (without DPIN/ DIN), with a maximum of five Designated Partners at the time of incorporation.

D. Statement of Solvency and Certificate of Truthfulness by LLP

• The Statement of Account and Solvency must now be signed on behalf of the LLP by an interim resolution professional, resolution professional, liquidator, or LLP partnership administrator under the Limited Liability Partnership (Second Amendment) Rules, 2022.
• Previously, the DPs who were in charge of the compliances were required to sign the Statement of Solvency.
• The revised rules also include the obligation of filing a Certificate of Truthfulness and Correctness of Annual Returns of LLPs with Partner's Contribution of up to INR 50 Lakhs or sales of up to INR 5 Crore.
• Form 8 (Statement of Solvency and Annual Return) will now include specific reporting for contingent liabilities.

E. Other changes in LLP (Amendments) Rules, 2022

1. Now, Form 9 is a web-based form that is made online for filing Consent of Partners while earlier, it was required to be filled in an offline format.
2. As a result, the Digital Signatures of all Designated Partners will be required at the time of LLP incorporation instead of just 1 DSC of the Designated Partner.
3. Forms 28 and 29 have been combined. Due to this, form 28 should be filed with the Notice of:

• Modification in the COI (Certificate of Incorporation or Registration)
• Modifications in any person's name or address who is authorized to accept services on behalf of a foreign LLP.
• A change in the principal business location in India.
• Cessation of having a place of business in India.

4. It should be noted that each modification to the LLP Deed must be recorded in detail in Form 3. Earlier only the deed was required to be attached.
5. Now, Form 11 (Annual Return) should include information about penalties and compounding of offenses.
6. According to the LLP (Amendments) Rules, 2022, special courts should be set up for speedy trials on criminal offenses like a fraud.

Conclusion

The Limited Liability Partnership (Second Amendment) Rules, 2022 is a welcome and significant move by the Ministry of Corporate Affairs. These changes will definitely help the businesses registering as LLPs to ease the process of Incorporation of an LLP. The said amendments came into enforcement on the 1st day of April 2022.