The Limited Liability Partnership (LLPs) is an alternative corporate business vehicle that provides the benefits of limited liability but allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement. In order to provide greater ease of doing business in India to law abiding LLPs, it was the need of the hour to review the penal provisions of the Act so as to decriminalize compoundable offences involving minor, procedural or technical violations of the Act, or offences which can be objectively identified as where no fraud or mala fide intent is present nor is there any harm to public interest.
On Wednesday, 28th July, 2021 Cabinet has passed LLP Amendment Bill, 2021. This will be the first time that changes are being made to the Act since it came into effect in 2009. They have made 29 amendments to LLP Act 2008 by LLP Amendment Bill 2021.
OBJECTIVE OF AMENDMENTS:
The main objects behind the LLP amendment bill, 2021 are as follow:
HIGHLIGHTS OF THE AMENDMENT:
Small limited liability partnership– The Bill defines the term “small limited liability partnership”. The definition is an exhaustive definition.
(i) a Sessions Judge or an Additional Sessions Judge, for offences punishable with imprisonment of 3 years or more; and
(ii) a Metropolitan Magistrate or a Judicial Magistrate, for other offences. They will be appointed with the concurrence of the Chief Justice of the High Court.
The Amendment Bill also elaborates on the procedure of trial of such Special Courts. The appeal and revision petitions shall lie to the High Court within whose jurisdiction the Special Court is located.
Appeal shall lie to the Regional Director in case the party is aggrieved by the order of the Registrar which shall be filed within 60 days.
Where an LLP fails to comply with the order within 90 days from the date of receipt of order, shall be punishable with fine not be less than Rs. 25,000, but may extend to Rs. 5,00,000.
Where a partner or designated partner fails to comply with an order within 90 days from the date of receipt of order, shall be punishable with imprisonment which may extend to 6 months or with fine which shall not be less than Rs. 25,000 but may extend to Rs. 1,00,000, or both.
The list of sections is as follows:
|Sr. No.||Relevant Section||Provision|
|1.||section 7(1)||Every limited liability partnership shall have at least two designated partners who are individuals and at least one of them shall be a resident in India: Provided that in case of a limited liability partnership in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such limited liability partnership or nominees of such bodies corporate shall act as designated partners|
|2.||section 7(4)||Every limited liability partnership shall file with the registrar the particulars of every individual who has given his consent to act as designated partner in such form and manner as may be prescribed within thirty days of his appointment|
|3.||section 7(5)||An individual eligible to be a designated partner shall satisfy such conditions and requirements as may be prescribed.|
|4.||section 9||A limited liability partnership may appoint a designated partner within thirty days of a vacancy arising for any reason and provisions of sub-section (4) and sub-section (5) of section 7 shall apply in respect of such new designated partner, Provided that if no designated partner is appointed, or if at any time there is only one designated partner, each partner shall be deemed to be a designated partner.|
|5.||section 13||Every limited liability partnership shall have a registered office to which all communications and notices may be addressed and where they shall be received.|
|6.||section 15||If the proposed name implies a connection with government or if the name contains a controlled word, it may only be registered with the approval of the Government.|
|7.||section 21||Every limited liability partnership shall ensure that its invoices, official correspondence and publications bear the following, namely:-
(a) the name, address of its registered office and registration number of the limited liability partnership; and
(b) a statement that it is registered with limited liability.
(2) Any limited liability partnership which contravenes the provisions of sub-section (1) shall be punishable with fine which shall not be less than two thousand rupees but which may extend to twenty-five thousand rupees.
|8.||section 25||Where there is any change in the name or address of a partner, file a notice with the Registrar within thirty days of such change.|
|9.||section 34||Every limited liability partnership shall file within the prescribed time, the Statement of Account and Solvency prepared pursuant to sub-section (2) with the Registrar every year in such form and manner and accompanied by such fees as may be prescribed.|
|10.||section 35||Every limited liability partnership shall file an annual return duly authenticated with the Registrar within sixty days of closure of its financial year in such form and manner and accompanied by such fee as may be prescribed.|
|11.||section 60||Compromise or arrangement of limited liability partnerships|
|12.||section 62||Provisions for facilitating reconstruction or amalgamation of limited liability partnerships|
It is evident from the amended Act that it focused on smoother operation of LLPs to enable the LLPs to enjoy the privileges currently enjoyed by the Companies under the Companies Act, 2013. They are trying to bridge the gap between Company and LLP’s and to make LLPs more attractive and easier to handle, so that many of the startups today, which prefer the LLP model can also feel equally given the ease of business opportunities.
It can be concluded from this article that Limited Liability Partnership is the most flexible form of business and offers a much-secured business environment to the partners. The latest amendments proposed through the Bill will provide coverage to a lot of small and large enterprises and provide the benefits of a company as well as traditional partnership firms.
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