The Union Cabinet on Wednesday approved amendments to the Limited Liability Partnership (LLP) Act which proposes to decriminalise offences under the law so as to improve ease of doing business and encourage start-ups.
After the amendment for decriminalisation is approved, the total number of penal provisions in the Act will be reduced to 22, the number of compoundable offences will be only seven, the number of non-compoundable offences will be only three, and the number of defaults will be only 12.
The Union Finance Minister Nirmala Sitharaman said, “An amendment has been proposed in the Limited Liability Partnership Bill for the first time. We are doing a lot of changes in the Companies Act and corporate bodies are getting a lot of ease of doing business. LLPs are becoming popular among start-ups.”
“As of today, you have 24 penal provisions in the LLP Act, 21 compoundable offences, and 3 non-compoundable offences. After today penal provisions will be cut to 22, compoundable offences will be only 7, non-compoundable offenses will be only 3,” the Finance Minister added.
The Finance Minister said this will help level the playing field for LLPs which otherwise compete against corporations that come under the Companies Act “we are bridging this gap. And making LLPs far more attractive and easy to handle so that many of the start-ups today, which prefer the LLP model, can also feel equally given the ease of business opportunities”.
“LLPs are becoming popular among start-ups. An amendment is being proposed to the LLP Act for the first time,” Finance minister added.
In all, 12 offences are proposed to be decriminalised and one provision (Section 73) entailing criminal liability is to be omitted. The 12 decriminalised offences will then get shifted to an internal adjudication mechanism to help unclog criminal courts from routine cases.
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