Limited Liability Partnerships (LLPs) are a very popular form of business in India, as they combine the flexibility of a partnership with the limited liability of a company.
Just like companies, LLPs also need to follow certain compliance rules. Two important compliance requirements are:

1. LLP Form BEN-2
2. LLP Form 4D

Both forms deal with the disclosure of beneficial owners and significant influence, but they serve different purposes.

Understanding Beneficial Ownership in an LLP

A person is considered a beneficial owner in an LLP if:

1. They own or control a certain percentage of contributions in the LLP.
2. They exercise significant influence or control over the LLP, even if their name is not formally mentioned as a partner.

This is done to ensure transparency and to prevent misuse of LLP structures for hiding ownership.

What is LLP Form BEN-2?

1. Meaning of Form BEN-2

LLP Form BEN-2 is a declaration to the Registrar of Companies (ROC) regarding the details of significant beneficial owners (SBOs) of an LLP.

This form is similar to the BEN-2 used by companies under the Companies Act, but it is specifically designed for LLPs.

It is used after the LLP receives Form BEN-1 from the beneficial owners.

2. Who is a Significant Beneficial Owner (SBO)?

A person is considered an SBO in an LLP if they:

a. Holds 10% or more contribution in the LLP,
OR
b. Holds 10% or more voting rights,
OR
c. Has 10% or more share of profits,
OR
d. Exercises significant influence or control over the LLP.

The ownership can be direct or indirect.

3. Why is Form BEN-2 required?

The government wants transparency in who actually controls an LLP.
LLPs must report any person who enjoys significant benefits, even if their name is not written in the LLP agreement.

This helps prevent:

a. Money laundering
b. Shell structures
c. Benami ownership
d. Tax evasion

4. When should Form BEN-2 be filed?

Form BEN-2 must be filed when:

a. The LLP receives a declaration from an SBO in Form BEN-1.
b. There are changes in the SBO’s ownership, influence, or control.
c. A new SBO is added or an existing one exits.

5. Time limit for filing

The LLP must file Form BEN-2 within 30 days of receiving Form BEN-1 from the SBO.

6. Who files it?

The Designated Partners of the LLP are responsible for filing it with the ROC.

7. Details required in Form BEN-2

Form BEN-2 usually includes:

a. Name and details of the SBO
b. Date of receiving Form BEN-1
c. Nature of ownership or control (contribution/voting/profit share)
d. Percentage of ownership
e. Documents supporting the SBO declaration

8. Documents required

The LLP needs to attach:

a. Copy of Form BEN-1 received from the SBO
b. Proof of identity and address of the SBO
c. Contribution agreement or proof of beneficial rights
d. Registered office authorization
e. Any other relevant document

9. Penalties for not filing BEN-2

If the LLP fails to file Form BEN-2:

a. The LLP and its designated partners may face penalties.
b. Additional late filing fees apply based on the delay.

The government has made this reporting strict to increase transparency.

 What is LLP Form 4D?

1. Meaning of Form 4D

LLP Form 4D is a reporting form used to disclose any person having a significant beneficial interest in the LLP. It is filed under Rule 22B(3) of LLP (Amendment) Rules, 2022.

While BEN-2 is filed after receiving BEN-1 from the SBO, Form 4D is filed when the LLP receives a declaration from a person having a beneficial interest under Rule 22B(2).

In simpler words:

BEN-2 = Significant Beneficial Owner declaration
LLP 4D = Beneficial Interest declaration

Both relate to ownership, but 4D focuses more widely on anyone who has a beneficial interest, even if not a partner.

2. Who must file Form 4D?

Form 4D must be filed by the LLP when a person declares:

a. They have a beneficial interest in the LLP.
b. They enjoy rights or profits through another person or arrangement.
c. They indirectly control another partner’s contribution.

3. What counts as Beneficial Interest?

A person has a beneficial interest if:

a. They provided money for the contribution, but the partner’s name is different.
b. They have an agreement that gives them some control or benefit.
c. They are part of a structure (trust, HUF, company, partnership) that indirectly enjoys ownership.

This form ensures that such hidden interests are disclosed.

4. When should Form 4D be filed?

The LLP must file Form 4D when it receives a beneficial interest declaration under Rule 22B(2).

5. Timeline

Form 4D must be filed within 30 days of receiving the declaration.

6. Details required

The form typically requires:

a. Name of the person having a beneficial interest
b. Percentage of interest
c. Type of interest (profit share/contribution/control rights)
d. Details of the arrangement or agreement
e. Date of receiving declaration

7. Documents to attach

The LLP attaches:

a. Declaration from the beneficial interest holder
b. Identity and address proof
c. Copy of agreement (if any)
d. Contribution details
e. Other supporting papers

8. Penalties for non-filing

Non-filing may lead to:

a. Fines for the LLP
b. Penalties for designated partners
c. Additional fees

Difference between LLP Form BEN-2 and LLP Form 4D