1 October 2021
The Limited Liability Partnership (Amendment) Act, 2021 (“LLP Amendment Act”) received the President’s assent on 13 August 2021. The following are the key amendments introduced by the LLP Amendment Act:
(a) The LLP Amendment Act has created a class of LLP called a “small LLP” in line with the concept of a ‘small company, and in which the contribution does not exceed INR 2,500,000 (Rupees Two Million Five Hundred Thousand), or such higher amount, not exceeding INR 50,000,000 (Rupees Fifty Million) as may be prescribed and the turnover of which for the previous financial year does not exceed INR 4,000,000 (Rupees Four Million), or such higher amount, not exceeding INR 500,000,000 (Rupees Five Hundred Million), as may be prescribed.
(b) The LLP Amendment Act has decriminalized certain minor offences and introduced amendments so as to convert the offences into civil defaults and to convert the nature of punishment from fines to monetary penalties.
(c) The LLP Amendment Act has amended the existing law allowing a Regional Director to compound any offence which is punishable by fine only under the Limited Liability Partnership Act, 2008 (“Act”).
(d) The LLP Amendment Act has inserted a new section in the Act, permitting the central government to establish special courts, as may be required for the purpose of providing a speedy trial for the offences under the Act. The LLP Amendment Act also provides for the powers and the procedure to be followed by these special courts.
(e) The LLP Amendment Act also provides the central government with the authority to prescribe the accounting and auditing standards in consonance with the National Financial Reporting Authority.
(f) Another key change is the change in the definition of a ‘resident in India’, which has been modified to provide that any person who is resident in India for 120 (one hundred twenty) days in the current financial year, may qualify as a resident in India, and may accordingly be appointed as a designated partner in an LLP. Under the earlier law, a person resident in India for 182 (one hundred eighty two) days in the last financial year would qualify within the definition of a ‘person resident in India’. 1.1.2.
The primary objectives of the LLP Amendment Act are to incentivise conversion of partnership firms into limited liability partnerships and to decriminalise certain offences so as to reduce criminal prosecutions for minor omissions in the normal course of the business transactions of an LLP.
Please click here to read the amendment act.
For further information, please contact:
Souvik Ganguly, Partner, Acuity Law
