Finance Minister Nirmala Sitharaman addresses a press conference. (Image: PTI)
Mumbai: To further accelerate the ease of doing business, the Union Cabinet on Wednesday approved the amendments to Limited Liability Partnership Bill, in which criminality has been removed to provide benefits to 2.3 lakh law-abiding corporations and strengthens Aatmanirbhar Bharat.
"To facilitate ease of doing business for the law-abiding corporates amongst the 2.3 lakh LLP firms, criminality has been removed and a penalty in the form of a fine has been decided for violations of general tendency," said Union Minister Anurag Thakur in a press briefing.
According to Union Finance Minister Nirmala Sitharaman, between large companies that are well-regulated and small proprietorships, LLPs did not benefit from either simplified regulation or ease of practice under proprietorship. "With today's Cabinet decision, we are bridging the gap & making LLPs more attractive, easy to handle," she said.
A total of 12 offenses are to be decriminalized for LLPs, and three sections will be omitted. These amendments will bring LLPs an equal playing field, compared to large companies under the Companies Act.
"With the Limited Liability Partnership Amendment Bill, we will have only 22 penal provisions, seven compoundable offenses, three non-compoundable offenses," said Sitharaman.
Welcoming the government's decision, Jyoti Prakash Gadia, Managing Director, Resurgent India, said, "The cabinet decisions taken today on economic issues will have far-reaching effects in so far as ease of doing business is concerned and also help in boosting customer confidence among the bank depositors. Amendment in LLP act proposes to now remove the criminality angle in respect of violations and will now only entail pecuniary penalty by way of a fine with no Criminal action. This will facilitate the middle-level entrepreneur in their business activities and growth. This is a critical decision similar to an earlier major reform of switch over from FERA to FEMA."