Compounding of Offences

Under the Limited Liability Partnership Act, 2008, compounding of offences refers to the process of voluntarily admitting to a violation of the provisions of the Act and paying a prescribed fee to avoid prosecution or legal action. It provides an opportunity for Limited Liability Partnerships (LLPs) and their designated partners to rectify non-compliances or violations by paying a penalty, instead of facing prosecution in court. Compounding is a way to resolve minor or technical non-compliances without resorting to lengthy legal proceedings.

Key Points about Compounding of Offences under LLP Act, 2008:


1) Applicability:

Compounding provisions under the LLP Act apply to offences that are punishable with fines only, and not to offences that attract imprisonment or both.

2) Applying for Compounding:

LLPs and designated partners can apply for compounding of offences by submitting an application in the prescribed format to the Registrar of Companies (RoC). The application should include details of the offence, the reasons for non-compliance, and any other relevant documents.

3) Conditions for Compounding:

The RoC has the discretion to accept or reject the application for compounding based on the nature and gravity of the offence. Compounding may not be allowed if it involves fraud or serious violations.

4) Payment of Fee:

If the RoC accepts the application for compounding, the LLP or designated partner must pay the compounding fee as prescribed under the LLP Rules, 2009.

5) Condonation of Delay:

The RoC may also consider applications for condonation of delay in filing certain documents or forms. Condonation of delay is different from compounding and is applicable when there is a delay in filing documents with the RoC.

6) Effect of Compounding:

Once the compounding fee is paid, the offence is deemed to be compounded, and no further legal action will be taken against the LLP or designated partner for that particular offence.

Offences that can be Compounded:

Some examples of offences under the LLP Act that may be compounded include:

Failure to file Annual Returns or Statement of Account and Solvency within the prescribed timeline.

Non-compliance with provisions related to the change of partners, registered office, or designated partners.

  • Failure to maintain proper books of accounts or records as required by the Act.

Compounding of offences under the LLP Act, 2008, provides an opportunity for LLPs and designated partners to rectify minor non-compliances by paying a prescribed fee. It helps avoid unnecessary legal proceedings and penalties, allowing entities to focus on their business operations. However, compounding is subject to the discretion of the RoC, and it is essential for LLPs to ensure compliance with all provisions of the LLP Act to avoid the need for compounding in the first place.

G Akshay Associates