MCA may decriminalize LLP violations

The government is set to introduce a Bill regarding the decriminalization of minor and technical violations in the Limited Liability Partnership (LLP) Act, and give these business vehicles more borrowing flexibility. The corporate affairs ministry is presently working on the Bill, based on suggestions given by a panel of experts led by secretary in the ministry Rajesh Verma.

The move signifies concerted efforts to bring to effect as quickly as possible all the planned legislative changes aimed at improving ease of doing business which the government hopes will add momentum to the economic recovery.

The idea is to decriminalize 12 offences that will be dealt with by an in-house adjudication mechanism rather than the National Company Law Tribunal (NCLT). One offence related to non-compliance of tribunal orders will be dropped to avoid duplication.

The Bill is expected to offer relief on certain fees and penalty for defaults to small LLPs defined on the basis of their total contribution and sales. There is also a plan to introduce an accounting and auditing regime for LLPs.