09/09/2021 - Indian Economy

KEY POINTS

·        The government shepherded the Limited Liability Partnership (LLP) Amendment Bill, 2021 through Parliament in an attempt to provide an impetus to the ‘ease of doing business’ reforms.

·        It is essential to understand that an LLP, by virtue of its structure, enjoys the benefit of fewer compliance and due diligence laws compared to a corporate governed by the Companies Act, 2013.

·        It has widened the scope to raise capital through the issue of non-convertible debentures, introduced auditing standards, special courts and a class of Small LLP as a parallel to the small corporates under the Companies Act.

·        For a better adjudication process, the amendment also mandates the establishment of Appellate Tribunals, and Special Courts for speedier trials.

·        For instance, non-compliance of quasi-judicial orders will now be dealt under the contempt jurisdiction of the tribunals formed under the Act to adjudicate and resolve corporate civil disputes.

·        It has been introduced to expand the risk appetite of the LLPs, thereby increasing their expected profit margins.

·        A cursory glance at the amendment sheds a ray of hope among start-ups and smaller corporate entities.

·        Earlier, the authorities had opened up the LLP for foreign investment via the automatic route. This amendment is projected to deepen the bond market, and enhance taxation efficiency, thereby furthering the ease of doing business.

Kindly review. TIA.