Author: Andri Shukla
The Ministry of Corporate Affairs (‘MCA’) issued a Statement of Reason dated June 19, 2020 for its decision to review certain penal provisions under the Limited Liability Partnership Act, 2008 (“LLP Act”) for decriminalization. The MCA has decided to undertake review in order to foster “greater ease of doing business” as well as to try to unclog the criminal justice system.
The review has been proposed by the MCA in respect of 20 penal provisions for compoundable offences and the current punishments therefor in the LLP Act, with a view to decriminalise them. The said provisions have been identified as being offences that are “minor, procedural, or technical violations of the LLP Act or offences which may not harm public interest”. These provisions cover punishments covering inadequacy of the number of designated partners; filing particulars of designated partners; eligibility and liabilities of designated partners; changes in designated partners; change in registered office of the LLP; name change of LLP; improper use of words ‘limited liability partnership’ or ‘LLP’; registration of change in partners; maintenance of books of accounts; timely filing of annual returns; providing information requested by Registrar; production of evidence and documents; timely filing of tribunal orders in respect of compromises/arrangements/reconstruction/amalgamation; offences for which no punishment is expressly provided; and, notification of conversion of LLP in correspondences.
The Statement recognizes that at present “more than 1,45,000 LLPs are registered under the said Act and a bulk of them are small and medium enterprises”. To try to foster a better business environment in India by minimising deterrents to ease of doing business, the MCA has identified the aforementioned penal provisions in the LLP Act, the criminalisation of which has been recognised as avoidable. By decriminalising the said penal provisions, the MCA seeks to encourage better compliance with the provisions in addition to try to unclutter the overburdened criminal justice system.
Stakeholders were invited to submit their suggestions and comments. Amendment of the LLP Act remains pending. The MCA’s notification itself can be accessed here: https://www.mca.gov.in/Ministry/pdf/Comments_19062020.pdf
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