Government plans to decriminalise compoundable offences under LLP Act : 20-06-2020

The ministry of corporate affairs (MCA) has proposed to decriminalise certain compoundable offences under the Limited Liability Partnership (LLP) Act, involving minor, procedural or technical violations “In order to provide greater ease of doing business in India to law abiding LLPs” it said.

In a public draft on Friday, the MCA listed 20 sections of the LLP Act, ranging from registration or change of designated partners to maintaining books of accounts to the improper use of the words ‘LLP’, seeking public comments and stakeholder consultations given the importance and large scale impact of the proposal.

“It has been decided to review the penal provisions of the Act to decriminalize compoundable offences…which may not involve any harm to public interest,” the draft said.

However, all the sections it mentioned are punishable by only a fine of varying amounts and not imprisonment. Experts suggested that this particular exercise could be to streamline the fine amounts.

“Not all criminal offences involve imprisonment, those with a fine amount are also criminal in nature as the offender can be taken to court to decide the liability,” said Pavan Kumar Vijay, founder of Corporate Professionals.

Decriminalisation here implies the fine can be decided by regulators like the Registrar of Companies instead of the case going to court, Vijay added.

The move was aimed at incentivising compliance, de-clogging the criminal justice system and promoting congenial business climate, the ministry said.

“As a part of the current initiative, the Ministry of Corporate Affairs seems to be planning for an overhaul of penalty provisions applicable for filing or reporting non-compliances by the partners of limited liability partnership firms, which do not involve substantial violations or are contrary to the larger public interest,” Sandeep Jhunjhunwala, partner at Nangia Anderson LLP.

The government has taken a series of such actions with decriminalisation of certain offences under the Companies Act earlier, and more recently a proposal to decriminalise minor offences under the financial laws.

“Subsequent to the proposed decriminalisation of various offences under the Companies Act, 2013, the Government has turned its eye towards limited liability partnerships, a legal entity form commonly used by small and medium enterprises for doing business in India,” Jhunjhunwala said.

Source : PTI

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