The Limited Liability Partnership (Amendment) Bill, 2021

The amendment seeks to amend Limited Liability Partnership Act, 2008 (or “the Act”) with an objective to:

• improve ease of doing business,
• make LLPs popular among startups and encourage business class to incorporate LLP,
• remove the fear of criminal prosecutions for non-substantive minor and procedural omissions and commissions in the normal course of their business,
• remove criminality of offences from business laws where no malafide intentions are involved.

Key amendments proposed in the Act are as follows: –

New provisions proposed in the Act are as follows: –

• Standards of accounting: The central government may prescribe the standards of accounting and auditing for classes of LLPs, in consultation with the National Financial Reporting Authority.
• Adjudicating Officers: The central government may appoint adjudicating officers for awarding penalties under the Act. Appeals against orders of the Adjudicating Officers will lie with the Regional Director.
• Special courts: The Bill allows the central government to establish special courts for ensuring speedy trial of offences under the Act. The special court will consist of: (i) a Sessions Judge or an Additional Sessions Judge, for offences punishable with imprisonment of three years or more; (ii) a Metropolitan Magistrate or a Judicial Magistrate, for other offences. Appeals against orders of these special courts will lie with High Courts.
• Appeals to Appellate Tribunal: The Bill adds that appeals cannot be made to National Company Law Appellate Tribunal (NCLAT)against an order that have been passed by NCLT with the consent of the parties. Also, the time limit for filing appeals for orders passed by NCLT must be within 60 days (extendable by another 60 days on sufficient cause) of the order.
• Small LLP: The Bill provides for formation of a small LLP where: (i) the contribution from partners is up to Rs 25 lakh (may be increased up to five crore rupees); and (ii) turnover for the preceding financial year is up to Rs 40 lakh (may be increased up to Rs 50 crore). The central government may also notify certain LLPs as start-up LLPs. Small LLPs will be subject to reduced fee lesser compliance and smaller penalties in event of default.

Manilesh Kashyap, Audit Associate, SW India