Decriminalisation of Compoundable Offences under the LLP Act, 2008

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MCA seeks public comments and suggestions for Decriminalisation of Compoundable Offences under the Limited Liability Partnership (LLP) Act, 2008, for Greater Ease of Doing Business for law abiding LLPs and Declogging of Criminal Justice system:

1. LLP 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. The Limited Liability Partnership Act, 2008 is intended to bridge the gap between a company governed by the Companies Act and a general partnership firm governed by the Partnership Act, 1932.

2. The Limited Liability Partnership Act (hereinafter referred to as “LLP Act/Act”) consists of 81 sections and 4 Schedules. Following two set of Rules have been prescribed under the Act.
(a) Limited Liability Partnership Rules, 2009; and
(b) Limited Liability Partnership (Windingup and Dissolution) Rules 2012.

3. The Act enjoins upon the LLP, partners and designated partners thereof to comply with the provisions of the Act and rules made there under. Contravention of provisions of the Act are punishable with fine (compoundable) or, in some cases, with imprisonment and fine (non-compoundable). Thus, the Act assigns criminal liability on the LLP, its partners, and designated partners and any other person (s) for non-compliance of certain provisions as the same are considered as offences under the Act.

4. At present, more than 1,45,000 LLPs are registered under the said Act and a bulk of them are small and medium enterprises. In order to provide greater ease of doing business in India to law abiding LLPs, it has been decided to review the penal provisions of the Act to decriminalize compoundable offences involving minor, procedural or technical violations of the Act, or offences which may not involve any harm to public interest. Criminalisation of minor violations acts as an avoidable deterrent and impinges upon the business sentiments.

5. The exercise to identify and decriminalize the provisions of Act is aimed at incentivizing compliance, de-clogging of criminal justice system and promoting congenial business climate.

6. Given the importance of this exercise as also its large-scale impact across society, the Government of India is conducting a stakeholder consultation exercise. As such, stakeholders are requested to submit their suggestions & comments on the
de-criminalization of the following compoundable offences under the Act to this Ministry.

7. The comments/ suggestions may kindly be submitted to the Ministry at the email address LLP.suggestions@mca.gov.in within 15 days, i.e., by 04.07.2020 -.

Please click link to MCA Comments Document to Download