The Company Law Committee (CLC), headed by the Corporate Affairs Secretary Rajesh Verma, has recommended that 12 offences under the LLP Act be decriminalized.
Context
The Company Law Committee (CLC), headed by the Corporate Affairs Secretary Rajesh Verma, has recommended that 12 offences under the LLP Act be decriminalized.
What is Limited Liability Partnership Act, 2008?
- In India, businesses mainly operate as companies, sole proprietorship and partnership.
- The introduction of 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.
- Limited Liability Partnerships have gotten quite popular in the last few years.
Which offences under the LLP Act has the committee recommended for decriminalisiation?
- Several offences related to timely filings, including annual reports and filings on changes in partnership status of the LLP, not related to fraud have been recommended for decriminalisation.
- The panel has recommended that companies be required to pay penalties for non-compliance, instead of fines which are imposed after a partner or the LLP is found guilty of misconduct by a court.
Who benefits from the permission for LLPs to issue NCDs?
- The CLC has also recommended that LLPs which are currently not allowed to issue debt securities be permitted to issue non-convertible debentures (NCDs) to facilitate raising of capital and financing operations.
- The move is likely to benefit startups and small firms in sectors which require heavy capital investment.
