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Cabinet clears amendments to LLP Act, to decriminalise 12 offences to boost biz
“A lot of changes are being made in the Companies Act, decriminalising many sections and improving ease of doing business for companies. A similar treatment had to be given for LLPs,” Union finance minister Nirmala Sitharaman said while addressing a press conference.
The Union cabinet on Wednesday cleared the amendments to the Limited Liability Partnership (LLP) Act, in order to decriminalise several provisions under the Act and also foster the ease of doing business in India. The changes, which include the removal of criminal action for failing to comply with the provisions of the Act, will help about 2,30,000 firms in the country.
“A lot of changes are being made in the Companies Act, decriminalising many sections and improving ease of doing business for companies. A similar treatment had to be given for LLPs,” Union finance minister Nirmala Sitharaman said while addressing a press conference.
“With the Limited Liability Partnership Amendment Bill, we will have only 22 penal provisions, 7 compoundable offences and 3 non-compoundable offences,” she said, adding 12 offences will be decriminalised for LLPs and three sections will be omitted.
Sitharaman also said the amendments would bring an equal playing field for LLPs, compared to large companies which come under the Companies Act, as LLPs are becoming popular among startups. Earlier, LLPs did not have the benefit of either simplified regulation or ease of practice under proprietorship, she pointed out.
The Union cabinet is also looking towards expanding the scope of small LLPs. “LLPs with contribution less than or equal to ₹25 lakh and turnover less than ₹40 lakh are treated as small LLPs. Now, ₹25 lakhs will go over to ₹5 crores and the turnover size will be treated as ₹50 crores,” Sitharaman told reporters on Wednesday.
Meanwhile, the cabinet also cleared the Deposit Insurance and Credit Guarantee Corporation Bill, 2021 to provide account holders access to up to ₹5 lakh within 90 days of a bank coming under moratorium to ensure timely support to depositors.
