Corporate affairs ministry amends rules for LLPs

New Delhi: The corporate affairs ministry has amended rules pertaining to Limited Liability Partnerships (LLPs) and has introduced various provisions, including a framework for adjudication of penalties.

As per the amended rules, the central government can appoint any of its officers, not below the rank of Registrar, as adjudicating officers for adjudging penalty under the provisions of the LLP Act.

Among other requirements, prior to adjudging the penalty for a violation, an adjudicating officer concerned has to issue a show-cause notice to LLP, partner or any other person concerned.

The rules will be effective from April 1, 2022.

Sampath Rajagopalan, partner (compliance and governance) at EY, said the amendments to the LLP Act such as decriminalisation of offences, adjudication of penalties, relaxation in residency qualification for a designated partner, power to apply accounting standards to classes of LLPs, relaxed fee/penalties for small and start-up LLPs are initiatives to make LLP a more attractive, reliable and business-friendly corporate vehicle.

"These changes should encourage businesses to consider LLPs as an option, particularly with the added advantage of a limited liability," he added.

Last year, various provisions under the LLP Act were decriminalised.