Finance & Economy | News & Insights

Central Government proposes to legitimise compoundable offences under LLP Act

Published: June 20, 2020
Author: munimji

Ministry of Corporate Affairs has decided to evaluate the penal provisions of the act to legitimise the compoundable offences which prove to be harmless to the public interest. Compoundable offences under Limited Liability Partnership Act implying minor, procedural or technical violations to be permitted with an aim to provide ease of doing business in India to law-abiding LLP stated by the Ministry.

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.

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 the 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.

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