The bill aims to amend the Limited Liability Partnership Act, 2008 and the Companies Act, 2013 to promote the ease of doing business and reduce compliance burden.
Need of the bill
- Enhancing Ease of Doing Business: By simplifying processes and providing ease of compliance for One Person Companies, small companies, start-up companies and producer companies.
- Attracting Investment: Updating the regulatory framework to align with evolving financial environments, and facilitate better corporate governance.
- Streamlining Regulations: Improving the operational efficiency by removing ambiguities and rationalizing compliance requirements such as Restructuring and Exit Processes.
Key provisions of the bill
- Corporate Social Responsibility (CSR) Relaxations: To reduce the burden on small companies, proposes doubling the profit threshold that mandates CSR spending to ₹10 crore.
- National Financial Reporting Authority : NFRA will be granted corporate status and expanded adjudicatory powers to issue directions to auditors in the interest of the investors.
- Share Buybacks and Fast-Track Mergers:Specified companies will be permitted to conduct up to two share buybacks in a single year, with a minimum gap of six months.
- Decriminalisation: Several minor corporate offences decriminalised and replaced with monetary penalties.
- Conversion of Trusts: It establishes a new structural framework that allows specified trusts (such as Alternative Investment Funds registered with SEBI or the IFSCA) to convert directly into LLPs.
Limited liability partnerships (LLPs) allow for a partnership structure in which each partner’s liabilities are limited to the amount they put into the business. - Audit: Certain classes of small companies will be exempted from mandatory audit requirements with the turnover threshold to be decided later.
Some of the concerns related to the bill are that it dilutes the existing Corporate Social Responsibility (CSR) provisions, undermine the constitutional balance between the Legislature and the Executive and dilute parliamentary oversight, on this background the bill is referred to JPC for a detailed analysis.
