{"id":34697,"date":"2021-08-21T11:59:37","date_gmt":"2021-08-21T06:29:37","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=34697"},"modified":"2021-08-21T12:01:19","modified_gmt":"2021-08-21T06:31:19","slug":"llp-amendment-bill-2021","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/llp-amendment-bill-2021\/","title":{"rendered":"LLP (Amendment) Bill, 2021: Everything You Need to Know"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The LLP (Amendment) Bill 2021, was first introduced in the higher house of parliament on July 30, 2021. The Bill sets out to amend the LLP Act, 2008. The Act facilitates for regulation of LLPs. <a href=\"https:\/\/corpbiz.io\/llp-registration\"><strong>Limited liability partnerships<\/strong><\/a> (LLP) refers to an alternative corporate structure to conventional partnership entities. Under LLP, the liabilities of the partners are limited to the extent of their investment in the business. The Bill transforms certain offences into civil crimes &amp; amends the nature of penal structure for these offences.\u00a0<\/p>\n\n\n\n<p>It\nalso seeks to provide small LLP for the appointment of certain adjudicating\nofficers &amp; set up of special courts.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is the Limited Liability Partnership (LLP)?<\/h2>\n\n\n\n<ul><li>A Limited Liability Partnership (aka LLP) refers to\na partnership in which some or all partners possess limited liability. It,\nhence, manifests elements of corporation and partnerships.&nbsp;<\/li><li>In an LLP business structure, one partner is not\nliable for another partner\u2019s illicit activities. This is a vital difference\nfrom that of an unlimited partnership.<\/li><li>In an LLP business structure, some partners may\npossess a form of limited liability identical to that of a corporation\u2019s\nshareholders.<\/li><\/ul>\n\n\n\n<p><strong>Who\nfaces liability?<\/strong><\/p>\n\n\n\n<ul><li>In the purview of new features, limited liability prevents creditors from seizing the partner\u2019s income or assets in case of crisis.\u00a0<\/li><li>Such LLPs are common in a business domain like accounting firms, law firms &amp; wealth managers<\/li><\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/do-you-want-to-choose-an-llp\/\">Do you want to Choose an LLP? Know more about this! <\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Here\u2019s what LLP (Amendment) Bill 2021 entails<\/h2>\n\n\n\n<p>LLP\n(Amendment) Bill, 2021 seeks to facilitate the following vital changes: <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Decriminalization of certain offences<\/h3>\n\n\n\n<p>The Act sets out some prerequisites regarding the operations of LLPs &amp; clarifies that breaching the same could lead the entity to face a monetary fine ranging from Rs 2000 to Rs 500000. These requisites include<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/08\/Decriminalization-of-certain-offences.png\" alt=\"Decriminalization of certain offences\" class=\"wp-image-34712\" width=\"517\" height=\"505\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/08\/Decriminalization-of-certain-offences.png 998w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/08\/Decriminalization-of-certain-offences-300x293.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/08\/Decriminalization-of-certain-offences-768x750.png 768w\" sizes=\"(max-width: 517px) 100vw, 517px\" \/><\/figure><\/div>\n\n\n\n<p><strong><em>The\nLLP (Amendment) Bill, 2021 decriminalizes these requirements &amp; levies a\nmonetary penalty.&nbsp;<\/em><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Change of the LLP name<\/h3>\n\n\n\n<p>The Act clarifies that the government may order an LLP to change its legalized name on specific prerequisites, including <em><strong>trademark infringement<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Trademark_infringement\"><em><strong>[1]<\/strong><\/em><\/a><\/sup>.\u00a0<\/p>\n\n\n\n<p>Non-adherence\nto such an order is punishable with a monetary fine ranging from Rs 10,000-Rs 5\n00,000. The LLP (Amendment) Bill, 2021 discards some of these grounds &amp;\nenables the government to facilitate a new name to such an entity instead of\nimposing a fine.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Penalty for fraud<\/h3>\n\n\n\n<p>As\nper the Act, if an LLP or its partners are found guilty of defrauding its\ncreditors, such individuals will be subjected to a penalty ranging from Rs\n50000-Rs 500000, along with a jail term of up to two years.<\/p>\n\n\n\n<p><em><strong>Please\nnote that the term of imprisonment in such a case may be extended to additional\nthree years based on the severity of the crime.&nbsp;<\/strong><\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Penalty for not following Tribunal\u2019s order<\/h3>\n\n\n\n<p>LLP\namendment Bill, 2020 entails provisions for penalizing LLPs who fails to comply\nwith the order released by the Company Law Tribunal (NCLT). Now, such actions\nwill be subjected to imprisonment up to six months &amp; a monetary fine of up\nto Rs 50 thousand. The Bill discards this offence.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">&nbsp;Compounding of offences<\/h3>\n\n\n\n<p>Under\nthe Act, the government may compound any illicit act, which can be subjected to\na monetary fine. The sum levied may be up to the max. fine cited for the\noffence. The LLP amendment Bill, 2021, amends to render that a regional\ndirector or official above such rank, appointed by the government, may compound\nsuch offences. The&nbsp;<\/p>\n\n\n\n<p>The\namount levied must be within the prescribed limit for the offence. If an\noffence by an LLP or its partners was subjected to compounding, then an\nidentical offence cannot confront compounding within three years.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Adjudicating Officers<\/h3>\n\n\n\n<p>Under\nthe Bill, the government may appoint adjudicating officers for conferring\npenalties under the Act. These will be central government officials not below\nthe designation of Registrar. Appeals against the judgement of the said\nofficials will lie with the Regional Director.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Special courts<\/h3>\n\n\n\n<p>The\nLLP amendment Bill, 2021 enables the central government to set up special\ncourts for ensuring prompt trial of offences under the Act. The special court\nwill comprise:&nbsp;<\/p>\n\n\n\n<p>Sessions\nJudge or an Additional Sessions Judge, for illicit actions punishable with a\njail term of 3 years or more; &amp;<\/p>\n\n\n\n<p>A\nMetropolitan Magistrate or a Judicial Magistrate, for another kind of offences<\/p>\n\n\n\n<p>Chief\nJustice of the High Court shall play a crucial role in their appointment.\nAppeals against the judgements of these special courts will lie with the High\ncourts.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Appeals to Appellate Tribunal<\/h3>\n\n\n\n<p>Under\nthe Act, appeals against the judgements of the NCLT lie with the NCLAT (National\nCompany Law Appellate Tribunal). The Bill clarifies that an appeal cannot be\nfiled against the orders that have been validated with the parties\u2019 permission.\nThe filing of the appeal must be done within 60 days (extendable by another\nsixty days) of the judgement.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">&nbsp;Set up of Small LLP<\/h3>\n\n\n\n<p><em><strong>The LLP amendment Bill, 2021 lays down some provision for the establishment of the small LLP where:<\/strong><\/em><\/p>\n\n\n\n<ul><li>The contributions from the active partners are upto\nRs 25 lakhs which may be extended up to Rs 5 crores.<\/li><li>The turnover for the erstwhile FY is up to Rs 40\nlakh which may be extended up to Rs 50 crores. The central government may also\nprompt certain LLPs via notification.&nbsp;<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Standards of accounting<\/h3>\n\n\n\n<p>Under\nthe LLP amendment Bill, 2021, the central government may set out the norms of\naccounting and auditing for LLP\u2019s classes with the help of the National\nFinancial Reporting Authority.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p>To summarize, the noticeable changes are proposed in the Bill entail the introduction of the notion of small companies, decriminalization of specific offences, enabling the government to set-up special courts, authorization to regional directors w.r.t compounding of offences, enabling the government to confer \u2018AS\u2019 and \u2018Auditing Standards for specific LLP\u2019s classes among LLPs.&nbsp;<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/apply-for-llp-registration-in-india\/\">How to Apply for LLP Registration in India <\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The LLP (Amendment) Bill 2021, was first introduced in the higher house of parliament on July 30, 2021. The Bill sets out to amend the LLP Act, 2008. The Act facilitates for regulation of LLPs. Limited liability partnerships (LLP) refers to an alternative corporate structure to conventional partnership entities. Under LLP, the liabilities of the [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":34708,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[155],"tags":[1926],"acf":{"service_id":"3"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":3938,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/34697"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=34697"}],"version-history":[{"count":13,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/34697\/revisions"}],"predecessor-version":[{"id":34713,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/34697\/revisions\/34713"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/34708"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=34697"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=34697"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=34697"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}