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The bill, which seeks to decriminalise 12 offences under the law and help improve the ease of doing business by amending the Limited Liability Partnership (LLP) Act, 2008, was passed through a voice vote.
Finance Minister Nirmala Sitharaman said it is a very important bill and will bring positivity to the LLP ecosystem.
She stressed the legislation will lead to ease of doing business.
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The bill proposes to introduce the concept of “small limited liability partnership” in line with the concept of “small company” under the Companies Act, 2013.
It will also amend certain sections of the Act so as to convert offences into civil defaults and to convert the nature of punishment provided in the said sections from fines to monetary penalties.
Currently, there are 24 penal provisions in the Act – 21 compoundable offences, three non-compoundable.
The proposed bill seeks to reduce the total number of penal provisions under the LLP Act to 22 – seven compoundable offences, three non-compoundable and 12 defaults to be dealt with under the ‘In-House Adjudication Mechanism.’
Compoundable offences are those which can be settled by paying a certain amount of money.
Offences that relate to minor or less serious compliance issues, involving predominantly objective determinations, are proposed to be shifted to the In-House Adjudication Mechanism (IAM) framework instead of being treated as criminal offences.
The bill also seeks to insert a new section 34A so as to empower the Central government to prescribe ”Accounting Standards” or ”Auditing Standards” for a class or classes of limited liability partnerships.
This is the first time that changes are being made to the Act.
At present, there are relaxations for thresholds up to turnover size and partner’s contribution of Rs 40 lakh and Rs 25 lakh, respectively.
Once the amendment is in place, the thresholds will be revised upwards.