3 May, 2008, 0622 hrs IST,
While the company law specifies elaborate processes for various corporate functions from holding shareholders meetings to mergers and amalgamations, the LLP Bill 2008 proposes simplified procedures for many of these.
But the time-tested provisions of the Companies Act of 1956 may be modified and applied on LLPs as these are known for their transparency, fairness and equitable treatment of all stake-holders, including minority share-holders.
The problem with company law provisions is that they do not facilitate quick implementation of corporate decisions in a dynamic economy. Company law provisions may be appropriately amended before they are made applicable to LLPs, a statement from ministry of corporate affairs said.
The finance ministry will introduce a tax regime for LLPs by the time the government frames rules under the proposed bill after it is enacted. The Cabinet had on Thursday cleared the bill.
Besides, incorporation as an LLP which mandates disclosures, will enhance access to credit for entrepreneurs. Apart from professionals, the LLP form of business would be available to enterprises which meets the requirements of the proposed law.