This is the first amendment since the LLP Act came into force in 2008. It supports a massively growing startup ecosystem where companies are thriving.
Rajya Sabha (file photo)
The Rajya Sabha on Wednesday approved the Limited Liability Partnership Amendment Bill, which aims to intensify the government’s Ease of Doing Business campaign and bring in the same rules for the segment as other large companies. This bill (bill) was earlier approved by the Lok Sabha. Therefore, now with parliamentary approval, it will become a law after the approval of the President.
This is the first amendment since the LLP Act came into force in 2008. It supports a massively growing startup ecosystem where companies are thriving. The newly amended law has exempted 12 offenses for LLPs and three sections of the earlier laws have been omitted. A new definition of small LLP has been introduced to support the growth of LLPs, increasing the individual or partner contribution level from the current Rs 25 lakh to Rs 5 crore. Along with this, the limit of turnover in LLP has also been increased from Rs 40 lakh to Rs 50 crore.
Ease of doing business now
Finance Minister Nirmala Sitharaman had earlier said that the amendments would bring LLPs on an equal playing field (competitively equal) compared to large companies covered under the Companies Act. Experts and industry stakeholders have lauded the changes in the LLP Act and said that the decision is a major development towards ease of doing business.
Jyoti Prakash Gadiya, Managing Director, Resurgent India said, “The amendment to the LLP Act now proposes to remove the criminal angle with respect to the violation and now only monetary punishment will be imposed in the form of fine without any criminal action. This will facilitate the medium scale entrepreneur in their business activities and development.
Describing the changes as a welcome step, Sijo Kuruvilla George, Executive Director, ADIF said that it is a founder-friendly move. He said that the amendment will make Limited Liability Partnership an even more attractive medium and India will become a more sought-after destination. The move will help in simplifying the life of the founders and will instill confidence in the intention of the government to bring in ease of doing business.
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