With a view to promote ease of business, the Cabinet has approved the LLP Amendment Bill, 2021 on 28th July 2021. These amendments are made to make LLP as an attractive model for startups and to achieve the objective of Atmanirbhar Bharat. Some of the key amendments made are as follows:
Introduction of Small LLPs
In line with the concept of “Small Companies” under the Companies Act 2013, concept of Small Limited Liability Partnership has been introduced in the LLP Act, 2008.
As per the Bill, a Small Limited Liability Partnership means an LLP which is:
having a contribution of upto INR 25 Lakhs and
turnover of upto INR 40 Lakhs.
It is to be noted that Government can increase the limit of Contribution by Partners to INR 5 Crores and the Turnover limit to INR 50 Crores.
Accounting Standards and Auditing Standards
The Bill proposes to introduce “Accounting Standards” and “Auditing Standards” for a class or classes of LLPS.
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 partnerships.
DE-CRIMINALISATION OF MONETARY PENALTIES
At present, there are 24 penal provisions, out of which 21 are compoundable offences, while 3 are non-compoundable ones.
With the proposed amendment, the total number of penal provisions under the LLP Act will be reduced to 22, out of which compoundable offences will be 7, non-compoundable offences will be 3 and the number of defaults to be dealt under the In-House Adjudication Mechanism (IAM) will be only 12.
COMPOUNDING OF OFFENCES
The Bill proposes to permit the Regional Director or any other officer not below the rank of Regional Director authorized by the Central Government to compound any offence under this Act which is punishable with fine only, by collecting from a person reasonably suspected of having committed the offence, a sum which may extend to the amount of the maximum fine provided for the offence but shall not be lower than the minimum amount provided for the offence.
Establishment Of Special Courts
For the purpose of Speedy trial of offences under the Act, the Bill proposed to empower Central Government to establish or designate as many Special Courts as may be necessary.
The Special Court shall constitute of 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 a Metropolitan Magistrate or a Judicial Magistrate of the first class, in the case of other offences.
The Bill has been amended to provide more clarity in the provisions when any person aggrieved by an order of the Tribunal prefer an appeal to the Appellate Tribunal.
Every appeal preferred 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.
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