Ms Nirmala Sitharaman
Minister of Finance
The bill aims to facilitate the ease of doing business and encourage startups ecosystems across the country by decriminalizing certain offences, creation of special courts, formation of small LLPs (limited liability partnership).
Salient Points ()
The bill facilitate the ease of doing business and encourage startups.
The Bill converts 12 offences into civil defaults and converts the nature of punishments from fines (monetary and jail term) to penalties (monetary).
It proposes to create small LLPs to encourage entrepreneurs. And would have fewer compliances and fees.
The bills provides for small LLPs:
- Contribution of partners is upto Rs 25 lakh (can be increased to Rs 5 crore)
- Turnover is upto Rs 40 lakh (can go upto Rs 50 crore)
The bill allows central government to establish special courts for speedy trails.
The bill proposes to have In house mechanism for offences related to less/minor issues instead of being treated as criminal offence.
The bill proposes to appoint as many Adjudicating officers above the rank of Registrar under LLP act.
The Limited Liability Partnership Act, 2008 was enacted and notified in 2009.
This partnership became popular type of business entity as it had many advantages like more flexibility in terms of working, cost effective, less compliance issues etc.
Even the government have been encouraging and supportive by proactively working towards making policies for ease of doing business in the country, since 2014.
After decriminalizing certain offences under Company’s Act, the ministry initiated to ease law in LLPs as well.
Bill introduced in Rajya Sabha
Bill passed in Rajya Sabha
Bill passed in Lok Sabha
WHY (as per the govt)
Salient Points ()
It would be useful for small and medium enterprises
It would ease the process of doing business for aspiring entrepreneurs.
It would help in rewarding law abiding businesses
This would discourage wrong practices
Traditional Partnership (TP) Firms vs Limited Liability Partnership (LLP) Firms
|Particulars||Traditional Partnership Firms (TP)||Limited Liability Partnership (LLP)|
|Liability||Liability is unlimited and partners are liable for any actions taken by any partners||Liability is limited to the amount of capital invested|
|Legal Backing||This is governed by Indian Partnership Act, 1932.||This is governed by Limited Liability Partnership Act, 2008|
|Perpetual Succession||There is no succession in traditional partnership.||It can have perpetual succession|
|Minors as partners||Minors can be admitted to take benefit||Minors cannot be admitted to the benefits|
|Entity||There is no such thing as separate legal entity||Has separate legal entity and is liable to the full extent of its assets (partners liability is limited)|