Report of the Company law committee on Decriminalization of the LLP Act 2008

Report of the Company law committee on Decriminalization of the Limited Liability Partnership Act, 2008

The Company Law Committee was set in 2019 to make recommendations to the Government inter alia on further decriminalization of certain “compoundable offences”, consequential amendments and certain other changes in the LLP Act, 2008 to facilitate and promote ease of doing business and ease of living.

Report of the Company law committee January 2021 

The Committee has recommended to decriminalize twelve compoundable offences and omission of one penal provision in the Act. No change has been suggested in the serious non-compoundable offences provided under the LLP Act.

The LLP is a body corporate and a legal entity separate from its partners. The Limited Liability Partnership Act, 2008 is intended to bridge the gap between a company governed by the Companies Act and a general partnership  firm governed by the Partnership Act 1932.

At present, more than 1.45,000 LLPs are registered under the LLP Act and a bulk of them are small and medium enterprises.

The Report is divided into three chapters. Chapter I deals with the decriminalization of offences in the LLP Act, Chapter II deals with the ease of living related changes and Chapter-III deals with miscellaneous provisions.

The Committee decided to adopt the same principle based approach which was adopted by it to recommend decriminalization of certain provisions of the Companies Act. 2013.

Committee has followed the following principles:

(a) Principle 1: Offences that relate to minor/ less serious compliance issues. involving predominantly objective determinations.  have been recommended to be shifted to the IAM framework instead of being treated as criminal offences.

(b) Principle 2: Offences that are more appropriate to be dealt with under other laws, have been proposed to be omitted from the LLP Act. 2008.

(c) Principle 3: For non-Compoundable offences that are very serious violations entailing an element of fraud intent to deceive and caused injury to public interest and non- compliance of order of statutory authorities impinging on effective regulation, the Committee has recommended that Status Quo be maintained.

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