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Legal Correspondent: GAURI NAIK
6th September 2021: LLP or the Limited Liability Partnerships was a concept was introduced in the year 2008 to reduce the liability of partners jointly and severally. In other words, for the act of one partner the other partner or the firm of partners was not liable. Thereafter various amendments have been made to the Limited Liability partnerships Act 2008 (LLP act 2008). One such amendment bill was introduced in 2021. The LLP amendment bill 2021 was first introduced in Rajya Sabha on 30th July 2021 and subsequently passed on 9th August 2021. The new amendment bill introduced new changes to the LLP act 2008 as the scope of 2008 act was limited and the new bill also introduced the concept of small LLPs in line with the concept of ‘Small Companies’ as in Companies Act 2013
The guidelines for formation of small LLPs are as follows (a) where the contribution from partner is up to Rs 25 lakhs (which maybe increased up to 5 crores) and (b) the turnover of partnership is up to Rs 40 lakhs (which can be increased up to 50 crore). Any partnership who falls within the following ambit shall be known as a Small LLP. The New bill also decriminalised many offences for the ease of doing business. Following were the changes that were introduced by the New Bill:
· Prior to the 2008 Act the LLP firm had to intimate for change of name in the partners or change in registered address of office or they had to file statements of accounts, insolvency report, statement of relations with creditors etc and violation of these attracted criminal liability. But under the New bill violations of any of this only attracts fine and no criminal liability is hence imposed
· Previously the LLP for change of its name had to comply with Central Government regulations and under special circumstances like ongoing trademark dispute or undesirability the Central government could fine such LLP. But now under the new bill the Central Government can give a new name to the LLP instead of imposing a fine
· Special courts can now be established for trials that arise under the LLP act 2008
· Appeals against order with the consent of both the parties cannot be filed and the maximum time limit for filing an appeal is 60 days
All of these amendments were introduced with a view to ease business and smooth functioning of businesses. For instance, instead of imposing a fine for violation of name the Central Government can now give new name to the LLP, this way business won’t be interrupted and the LLP won’t entangle itself in legal issues at the very start of its business. Similarly, not providing an appellate mechanism for such parties who have by mutual consent agreed to the order would reduce paper work, time and energy of the court and an upper time limit fixed reduced litigation
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