Current AffairsEconomics

Amendment to LLP Act

The government approved amendments to the Limited Liability Partnership (LLP) Act of 2008, including decriminalising 12 offences under the law.

  • Law-abiding corporates were to get Ease of Doing Business benefits and part of the criminality related sections would be replaced with penalties
  • As many as 21 of the provisions are compoundable offences, which the amendments propose to whittle down to just seven.
  • The amendments include a new definition for small LLPs and would benefit the 2.3 lakh LLP firms currently operational in the country.
  • Of the 24 penal provisions in the Act, one would be omitted and a total of 12 cognisable offences were being decriminalised.

 Limited Liability Partnership (LLP)

  • A limited liability partnership (LLP) is a formal partnership between at least two business partners.
  • The Limited Liability Partnership Act, 2008 was enacted by the Parliament to introduce and legally sanction the concept of LLP in India.
  • Unlike the general partnerships in India, LLP is a body corporate and legal entity separate from its partners, have Perpetual succession and any change in the partners of a LLP shall not affect the existence, rights or liabilities of the LLP.
  • Each business partner is provided with limited liability, which means they aren’t fully responsible for the business’ debts or liabilities.
  • LLP has provided a platform to small and medium enterprises and professional firms of company secretaries, chartered accountants, advocates etc. to conduct their business/profession efficiently which would, in turn, increase their global competitiveness.
  • LLP is viewed as an alternative corporate business vehicle that provides the benefits of limited liability but allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement.
Tags: Current Affairs, Economics

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