In a significant move aimed at easing the compliance burden and promoting business-friendly regulation, the Ministry of Corporate Affairs (MCA) has proposed the decriminalization of certain offenses under the Limited Liability Partnership (LLP) Act, 2008. The proposed amendments are designed to convert minor procedural lapses and technical defaults into civil violations, which would attract monetary penalties instead of criminal prosecution. This initiative is part of the government’s broader vision to decriminalize business laws and boost India’s Ease of Doing Business ranking.

According to MCA officials, the proposal covers non-compliance areas such as late filings, omission of statutory entries, and minor documentary discrepancies, which currently attract penal consequences, including court proceedings. The revised framework will classify these into compoundable violations handled through an internal adjudication mechanism. This would remove the criminal tag attached to inadvertent errors, thereby encouraging entrepreneurs to focus on business development rather than fear legal entanglements. The proposed reforms are in line with the decriminalization roadmap already implemented in the Companies Act.

Additionally, the MCA is expected to roll out a web-based adjudication system for resolving such civil infractions swiftly and transparently. The system will feature graded penalties based on severity and frequency of default, with first-time violators receiving warnings or lower penalties, promoting a culture of compliance rather than punishment. Experts see this proposal as a balanced reform that protects the interests of regulators while ensuring that LLPs, especially small firms and startups, are not overburdened by disproportionate penalties. Stakeholder consultations are underway, and a formal amendment bill is expected to be tabled soon in Parliament.