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Highlights of Limited Liability Partnership Amendment Bill 2021

Continuing with the efforts to boost ease of doing business as well as to encourage startups ecosystem, the government on 28th July 2021 approved amendments to the Limited Liability Partnership (LLP) Act, including decriminalising 12 offences under the law. The Finance Minister said that they are bridging this gap. And making LLPs far more attractive and easy to handle so that many of the startups today, which prefer the LLP model can also feel equally given the ease of business opportunities.


Below are the highlights of the Limited Liability Partnership Amendment bill 2021:

Currently, there are 24 penal provisions and 21 are compoundable offences, while 3 are non-compoundable ones. With the proposed amendments, the total number of penal provisions under the LLP Act will be reduced to 22, compoundable offences will be 7, non-compoundable offences will be 3 and the number of defaults to be dealt under the In-House Adjudication Mechanism (IAM) will be only 12.

A total of 12 offences are to be decriminalised for LLPs.

Three sections are to be totally omitted

At present, there are relaxations for thresholds up to turnover size and partner’s contribution of Rs. 40 lakh and Rs. 25 lakh, respectively. The same has been changed Rs. 25 lakh will go to Rs. 5 crore and Rs. 40 lakh the turnover size will now be treated as Rs. 50 crore. So, even Rs. 5 crore contribution and Rs. 40 crore or Rs. 50 crore turnover will be treated as a small LLP, which means we are expanding the scope of what can be a small LLP. The businesses, which need a larger turnover, larger contribution of the proprietors, will also get the benefit of being small in its definition. Once the amendment is in place, the thresholds will be revised upwards. The above amendment can be summarised as follows:

Particulars New Current
Partners Contribution Rs. 25 Lakh Rs. 5 Crore
Total Turnover Rs. 40 Lakh Rs. 50 Crore


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