The Rajya Sabha passed the Limited Liability Partnership (Amendment) Bill on last Wednesday. The bill aims to stimulate the start-up ecosystem and increase ease of doing business in India.
The bill, which was passed following a brief debate, proposes to alter the Limited Liability Partnership (LLP) Act, 2008, to decriminalize 12 criminal offences and improve the simplicity of conducting business.
Nirmala Sitharaman, the finance minister, moved the bill for discussion and passage. Last week, the bill was introduced in the House.
The minister stated that the measure is timely and will benefit the LLP ecosystem. She emphasized that the legislation would make conducting business easier.
Below is the list of things the Limited Liability Partnership bill proposes:
- The bill proposes to add the concept of "small, limited liability partnership" to the Companies Act of 2013, which is similar to the idea of "small company."
- It will also change the form of punishment in some provisions of the Act, converting offences into civil defaults and changing the nature of fines to monetary penalties.
- The proposed bill aims to decrease the overall number of penal provisions under the LLP Act to 22, with compoundable offences reduced to seven, non-compoundable offences reduced to three, and the number of defaults dealt with via the ‘In-House Adjudication Mechanism' reduced to only 12.
- There are currently 24 punitive provisions, 21 of which are compoundable and 3 of which are non-compoundable. Compoundable offences are those that can be resolved with a monetary payment.
- Instead of being treated as criminal offences, minor/less serious compliance issues involving primarily objective determinations are recommended to be moved to the In-House Adjudication Mechanism (IAM) framework.
- The bill also proposes to add a new section 34A, which would give the central govt the authority to regulate "Accounting Standards" or "Auditing Standards" for a class or classes of limited liability partnerships.
- The Union Cabinet had approved revisions to the Act earlier last week, including the decriminalization of 12 penal offences. This is the first time since the Act's Introduced in 2009 that it has been amended.
- There are currently relaxations for thresholds up to a turnover size of 40 lakh and a partner contribution of 25 lakh, respectively. The criteria will be raised once the amendment is in place.
The amendment bill was introduced in the Rajya Sabha on August 04. It proposes amendments to the existing LLP (limited liability partnership) Act. The Bill will definitely bring some revolutionary changes in the LLP Act, and it will be helpful for the new and old entrepreneurs who started their business as an LLP.
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