The Ministry of Corporate Affairs (MCA) may soon form a committee for revamping and reviewing the decade-old LLP framework.
The review of LLP’s is considered the lowest compliance hybrid between companies and partnerships, following which comes to a penalty of Rs.100 per day for delayed filing and difficulties faced in the dissolution of such entities.
The MCA may ask Registrar of Companies (ROC) to revise the office memorandum, which barred the LLPs from carrying out any manufacturing activities. The committee would soon be set up to review the LLP’s framework and the issues regarding its implementation.
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The memorandum was implemented on the companies without any prior notice, and later the same was withdrawn, which caused significant confusion. Experts have demanded more clarity on whether an LLP can engage in manufacturing activity, issues related to transfer of partnership share in case a partner leaves the firm etc.
Issues like applicability of higher tax rate of 30% as compared to 25% on small companies have also been pointed out.
An official communication for the stakeholders is required to bring clarity to this matter and to put an end to the confusion.