Amendments to LLP Rules, 2009 – Adjudication of penalties & its impact.

Last week, the LLP Rules, 2009 were amended (effective from April 1, 2022). The amendments are quite significant. One of the amendments relates to adjudication of penalties. Provisions are a bit similar to adjudication under the Cos. Act, 2013. These provisions in the Rules are to be read with the penal provisions under the LLP Act. The amendment Rules states that the requirement of submission of replies in electronic mode shall become mandatory after creation of e-adjudication platform. Amendment to LLP Rules also provide for appeal against order of adjudicating officer i.e. to Regional Director having jurisdiction.

Another important amendment to the Rules is a change in the filing fees by LLP for filing, registering, or recording any document, form, statement, notice, Statement of Accounts and Solvency, annual return and an application along with the statement for conversion of a firm or a private co. or an unlisted public co. into LLP. Different statutory fees for Small LLPs and other than Small LLPs.

Changes proposed w.r.t. the name resembling Trademark and remedies.

Also, quite a few provisions of Cos. Act are now applicable to LLPs (will share my analysis on this soon). The provisions of LLP (Amendment) Act are also notified.

My views: For India Inc., 2022 is a year for adjudication of penalties under Cos. Act and LLP Act, both. For Cos., the process has already started. LLP Act and Rules gives necessary powers to initiate adjudication proceedings for non-compliances. The orders for LLPs would be available on the MCA website. Just like Cos., now the compliances for LLPs would be required to be taken seriously. It is now not only about paying hefty annual filing fees for LLPs. However, there should be some rationale (justified in writing) in initiating action against LLP for the non-compliances and also there should be specific parameters for imposing penalties. Parameters could be capital contribution, turnover of LLP, whether public interest is affected, nature of non-compliance, etc. Otherwise, instead of promoting compliance, such adjudication proceedings would be harassment for LLPs (presently, the case is for Cos.).