The Ministry of Corporate Affairs vide its notification dated 11th February 2022, has appointed 1st day of April 2022, as the date on which the provisions of section 1 to 29 of Limited Liability Partnership (Amendment) Act, 2021 shall come into force.
The Amendment Act introduces the concept of Small LLP and Start-up LLP (Addition of Section 2(1)(ta)
Small Limited Liability Partnership” means a limited liability partnership:
- The contribution of which, does not exceed twenty-five lakh rupees or such higher amount, not exceeding five core rupees
- The turnover of which, as per the Statement of Accounts and Solvency for the immediately preceding financial year, does not exceed forty lakh rupees or such higher amount, not exceeding fifty core rupees which meets such other requirements as may be prescribed, and fulfills such terms and conditions.
- which meets such other requirements as may be prescribed, and fulfils such terms and conditions as may be prescribed.
As per the earlier Act, if an LLP or its partners carry out an activity to defraud their creditors, or for any other fraudulent purpose, every person party to it knowingly is punishable with imprisonment of up to two years and a fine between Rs 50,000 and five lakh rupees.
However through this amendment the maximum term of imprisonment has been increased from two years to five years.
According to the Act, the central government has the authority to order an LLP to change its name for certain reasons (such as the name being undesirable or identical to a trademark pending registration). Failure to follow such instructions can result in a fine ranging from Rs 10,000 to Rs 5 lakh rupees. Instead of imposing a fine, the Act removes some of these grounds and empowers the central government to assign a new name to such an LLP.
