MCA Extends Fraud Provisions of Companies Act to Limited Liability Partnerships

Through notification G.S.R. 639(E) dated 31st August 2022, the Ministry of Corporate Affairs exercised its powers under Section 30(2) of the Limited Liability Partnership Act, 2008 to extend certain provisions of the Companies Act, 2013 to LLPs. One of the most impactful extensions was Section 447, which deals with punishment for fraud.

What this means for LLPs and their partners:

• Any act of fraud committed by an LLP or its partners is now punishable with imprisonment (minimum six months to ten years) and a fine, mirroring the penalties under the Companies Act.
• “Fraud” is defined broadly under the Companies Act, and now that definition applies equally to LLPs – covering false statements, concealment of facts, and any act intended to deceive or gain undue advantage.
• Designated partners and other officers of the LLP can be held criminally liable if they were aware of the fraudulent conduct and failed to prevent it.
• The extension applies retrospectively to any fraud discovered after the notification came into effect, regardless of when the act occurred.

This move closes a long‑standing regulatory gap. Previously, LLPs were not subject to the same stringent fraud‑related penalties as companies, even though many large professional firms operate as LLPs. With this notification, investigators now have the same tools to prosecute fraudulent LLPs as they do for companies.

Our book “Serious Fraud under the Companies Act & LLP Act” provides a complete commentary on these provisions, including practical guidance for compliance officers and legal advisors.

(Note: This summary is based on the e‑Gazette notification G.S.R. 639(E). Always refer to the official text for accurate interpretation.)