What is the LLP Amendment Bill 2021?
‘LLPs are becoming popular among startups. An amendment is being proposed to the LLP Act for the first time,’ said finance minister Nirmala Sitharaman
Continuing efforts to foster ease of doing business as well as to encourage the startups ecosystem, the Cabinet has approved LLP Amendment Bill, 2021. They have made 30 amendments to the LLP Act 2008 by LLP Amendment Bill 2021.
Key Highlights of Amendment:
I. Introduction of Small LLPs
- The government will also introduce a new definition of small LLPs based on their turnover size and contributions by partners or proprietors. At present, there are relaxations for thresholds up to turnover size and partner’s contribution of Rs 40 lakhs and Rs 25 lakhs, respectively.
- “Now, Rs 25 lakh will go to Rs 5 crores and Rs 40 lakh turnover size will now be treated as Rs 50 crores. So, even Rs 5 crores contribution and Rs 40 crores or Rs 50 crores turnover will be treated as a small LLP, which means we are expanding the scope of what can be a small LLP.
II. De-criminalisation of compoundable offences:
- Penal provisions under the LLP Act will be reduced to 22 (With Compoundable offences to 7 & Non-compoundable offences to 3)
- The remaining 12 de-criminalized offences would then get shifted to In-house Adjudication Mechanism (IAM) thereby de-clogging the criminal courts from routine cases
III. Accounting Standards and Standards on Auditing for classes of LLPs
- The bill proposes the Accounting Standards and Standards of Auditing for a class or classes of limited liability partnership. The Central Government may, in consultation with the National Financial Reporting Authority prescribe the standards of accounting; and prescribe the standards of auditing, as recommended by the Institute of Chartered Accountants of India constituted under section 3 of the Chartered Accountants Act, 1949, for a class or classes of limited liability partnership.
IV. Compounding of offence
- The Regional Director or any other officer not below the rank of Regional Director authorised by the Central Government may compound any offence under this Act which is punishable with fine only, by collecting from a person reasonably suspected of having committed the offence
- Every application for the compounding of an offence shall be made to the Registrar who shall forward the same, together with his comments thereon, to the Regional Director or any other officer not below the rank of Regional Director authorised by the Central Government.
V. Establishment of Special Court for speedy trial of offences
- The Special Court shall consist of—
(a) a single Judge holding office as Sessions Judge or Additional Sessions Judge, in case of offences punishable under this Act with imprisonment of three years or more; and
(b) a Metropolitan Magistrate or a Judicial Magistrate of the first class, in the case of other offences, who shall be appointed by the Central Government with the concurrence of the Chief Justice of the High Court.
- No court, other than the Special Courts referred to in section 67A, shall take cognizance of any offence punishable under this Act or the rules made thereunder save on a complaint in writing made by the Registrar or by any officer not below the rank of Registrar duly authorised by the Central Government for this purpose.
VI. Establishment of the Appellate Tribunal
- Any person aggrieved by an order of Tribunal may prefer an appeal to the Appellate Tribunal,
- Every appeal preferred under sub-section (2) shall be filed within a period of sixty days from the date on which the copy of the order of the Tribunal is made available to the person aggrieved and shall be in such form, and accompanied by such fees, as may be prescribed.