The Parliament on August 9 passed The Limited Liability Partnership (Amendment) Bill, 2021. The Lok Sabha passed it on August 9 while the Rajya Sabha had passed it on August 4. It amends the Limited Liability Partnership (LLP) Act 2008 to decriminalise certain provisions and give a level playing field to LLPs.
Salient features of Limited Liability Partnership (Amendment) Bill, 2021
- The bill seeks to decriminalise 12 offences under LLPs.
- Currently, there are 24 penal provisions in the LLP Act, 21 compoundable offences, and 3 non-compoundable offences.
- After the amendments, the penal provisions will be cut to 22 with compoundable offences reduced to 7 and non-compoundable offences will remain the same.
- The decriminalized cases will be shifted to an “In-house Adjudication Mechanism” (IAM) which would help reduce the burden of criminal courts.
- The bill seeks to introduce the concept of “small limited liability partnership” in line with the concept of small company under the Companies Act, 2013.
- Rs. 5 crores partner’s contribution and Rs. 50 crores turnover will be treated as a small LLP thereby expanding the scope of a corporate business to be treated as a small LLP.
- The small LLPs will be subject to reduced fee, lesser compliance and smaller penalties in an event of default.
- The Bill provides that Regional Directors authorised by the Central Government may compound any offence under this Act which is punishable with fine only.
- The amendment bill provides for the establishment of special courts for speedy trial of offences under the Act.
- Under the Bill, the central government may prescribe the standards of accounting and auditing for classes of LLPs, in consultation with the National Financial Reporting Authority.
- Under the LLP Act, 2008, appeals against orders of the NCLT lie with the National Company Law Appellate Tribunal (NCLAT). The amendments in the Bill says that appeals cannot be made against orders that have been passed with the consent of the parties and appeals must be filed within 60 days of the order.
- The amendment bill proposes to increase the maximum term of imprisonment from two years to five years for any fraudulent activity and a fine between Rs. 50,000 to Rs. 5 lakh can also be imposed.
What is a limited liability partnership : A limited liability partnership is a corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
(Source: Moneycontrol)
