Company Law Committee recommended "Small LLP"

The Company Law Committee (CLC) has presented its Report on Decriminalization of the Limited Liability Partnership Act, 2008. The CLC was setup on 18^th September, 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.

The Committee appreciated the inputs received from Institute of Company Secretaries of India.

The Committee had submitted its report on 04^th January, 2021 and made recommendation 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 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.

Further, the CLC highlighted the need for the creation of a class of ‘small LLPs’ which would be subject to lesser compliances, fees and penalties to reduce the costs of compliance. MCA has invited public comments/ suggestions on the recommendations of the Committee to this Ministry latest by February 02, 2021 through email at email id : IIp.amendment @ mca.gov.in.

Thanks for sharing this detailed update on the Company Law Committee’s (CLC) recommendations about LLPs!

Here’s a quick summary and some context:

Key Points on “Small LLP” & Decriminalization Recommendations

1. Decriminalization of Offences

The CLC recommended decriminalizing 12 compoundable offences under the LLP Act, 2008.
This aligns with the approach taken for Companies Act, 2013 to reduce penal consequences for minor procedural lapses.
Serious non-compoundable offences remain unchanged.

2. Ease of Living & Compliance

The Committee suggested creating a new category called “Small LLPs”.
Small LLPs would be subject to:
- Lower compliance requirements
- Reduced fees
- Lesser penalties
This is aimed at lowering the cost of compliance and promoting ease of doing business.

3. Public Consultation

MCA invited public comments and suggestions by 2 February 2021.
This feedback would help finalize amendments to the LLP Act.

Why is this important?

Small LLPs often struggle with the high cost and complexity of compliance.
This move could boost entrepreneurship and reduce regulatory burden on smaller LLPs.
Aligns LLP law with modern business needs and promotes ease of living.