MCA initiates process of Decriminalization of Compound Offences under LLP Act, 2008

MCA initiates decriminalisation of LLP ActBased on  the recommendations of the Company Law Committee (CLC) headed by Corporate Affairs Secretary, Rajesh verma, the Ministry of Corporate Affairs (MCA)   has started the process of Decriminalization of Compound Offences under the Limited Liability Partnership (LLP) Act, 2008.

  • 12 Offence have been proposed to be decriminalized & 1 provision (Section 73) containing criminal liability has been proposed to be omitted
  • 12 decriminalized offences will be transferred to In-House Adjudication Mechanism (IAM) to free criminal courts from routine cases.

i.Objectives behind Decriminalization of Compoundable Offences:

  • To Encourage Youths to take up Entrepreneurship
  • Removing fear of Criminal prosecutions for non-substantive minor & procedural omissions & commissions during normal business transactions.
  • To remove the criminality of offence from business laws in which no ill intentions were involved.
  • For ensuring Ease of doing business for law abiding LLPs.

 ii.MCA has adopted three principles for the Decriminalization process. They are

  • Principle 1 – Minor/less serious compliance issues will be shifted to the In-house Adjudication Mechanism (IAM) framework instead of being treated as criminal offences.
  • Principle 2 – Offences which are more appropriate to be dealt with under other laws have been proposed to be omitted from the LLP Act, 2008.
  • Principle 3 – On issues like of Serious Violations such as fraud, intent to deceive, injury to public interest or non-compliance of order of governing authorities, existing laws will be followed.

New concepts for greater Ease of Doing Business:

MCA has initiated new concepts for greater Ease of Doing Business.

Small LLP:

i.Proposal for creating a new LLP class namely ‘Small LLP’ in line with the concept of Small Companies.

ii.Benefits of small LLPs

  • Lesser Compliances
  • Lesser fee or additional fee
  • Less penalties in case of default

iii.The low cost of compliance will enable unincorporate Micro and Small partnerships to transform into LLPs which have organized structures.

  • The Transformation will help them to utilize the benefits given to LLPs by the Government.

Non-convertible Debentures (NCDs):

MCA has also proposed to allow LLPs to raise capital through issue of Non-Convertible Debentures (NCDs) (alternative to equity participation) from investors regulated by SEBI or RBI.

  • This will help enhance the deepening of Debt Market & capitalization of LLPs.

Reduction of Additional Fee:

Additional Fee can be reduced by amending Section 69 of the Act.

  • Reduction of Additional Fee of INR 100 per day for delayed filing of forms, documents.
  • This will help in smooth filing of records & return of LLPs which will ensure updated registry for proper regulation & policy making.

Recent Related News:

i.On March 4, 2020, MCA introduced a scheme “LLP Settlement Scheme, 2020” for limited liability partnership (LLPs) by allowing a one-time condonation of delay in filing statutorily required documents with the Registrar of Office (ROC).

ii.March 31, 2020, MCA introduced the “Companies Fresh Start Scheme, 2020” and revised the “LLP Settlement Scheme, 2020”.





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