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Amendment to LLP Act: A New Regime

posted 2 years ago

The Central Government on February 11, 2022 issued various notifications related to Limited Liability Partnership (“LLP”).

The Limited Liability Partnership (Amendment) Act, 2021 (“Amendment Act”) which was notified on August 13, 2021 has been made applicable on LLP with effect from April 1, 2022.

The Amendment Act introduced the concept of small/start up LLP, decriminalization of offences, compounding of offences, adjudication of penalties, rectification of name of LLP, differential fee structure etc. The Amendment Act has altered the overall structure of the LLP Act, 2008 (“Act) and now the Act has substantially been aligned with the Companies Act, 2013.

In order to align the LLP Rules, 2009 with the Amendment Act, Central Government vide another notification dated February 11, 2022, notified the Limited Liability Partnership (Amendment) Rules, 2022 thereby amending rule 5, 18 and 19 of the LLP Rules, 2009. Further, the new rules 19A, 37A, 37B, 37C and 37D have been inserted vide the amendment rules which provide for the allotment of new name to existing LLP under section 17(3) the Act, adjudication of penalties, appeal against order of adjudicating officer, registration of appeal and disposal of appeal by Regional Director, respectively. The amendment rules are also applicable on LLPs with effect from April 1, 2022.

One of the key amendment introduced vide the amendment rules is that a registered owner of trademark (i.e. LLP, company, proprietor) having trademark similar to or resembling the name of a LLP, may apply to the Regional Director to give direction to the existing LLP to change its name. If the existing LLP does not change its name as per the directions issued within three months of the order of Regional Director, the Registrar shall issue new name to the LLP with the combination of the letter “ORDNC, (Order of Regional Director Not Complied), Year of passing direction, Serial number, Existing LLPIN.

The existing LLP whose name has been changed by the Registrar would be under an obligation to comply with the provisions of the Act and mention the statement “Order of Regional Director Not Complied” below its name on its official correspondence, invoices and publications.

In yet another notification dated February 11, 2022 Central Government has notified that certain provisions of Companies Act, 2013 such as sections 90 (Register of significant beneficial owners in a company), 164 (Disqualifications for Appointment of Director), 165 (Number of Directorships), 167(Vacation of Office of Director), 252 (Appeal to Tribunal) and section 439 (Offences to be non-cognizable) shall apply to LLPs, with the modifications specified in the notification. The modifications provides that the word “Director” shall be read as “Designated Partner” and the word ‘Company” shall be read as “Limited Liability Partnership” wherever appears in the aforesaid sections of the Companies Act, 2013. 

Disclaimer: This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to herein. This publication has been prepared for information purposes only and should not be construed as a legal advice. Although reasonable care has been taken to ensure that the information in this publication is true and accurate, such information is provided ‘as is’, without any warranty, express or implied, as to the accuracy or completeness of any such information.

For further information on this topic please contact Ms. Neetika Ahuja, Partner at Clasis Law by email ([email protected]).

 

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