Companies (CSR Policy) Rules, 2014 and issued clarifications and FAQs by way of circulars, so
as to facilitate effective implementation of CSR and ensure its compliance.
Limited Liability Partnerships
In India, about 95 per cent of industrial units are Micro, Small and Medium Enterprises
(MSMEs). As per the survey conducted by MSME, over 90 per cent of these are registered as
proprietorships, about 2 to 3 per cent as partnerships and less than 2 per cent as companies. The
corporate form does not appear to be widely prevalent amongst MSMEs. Analysis of the data
collected by the Ministry of MSME suggests that high compliance cost under the Companies
Act, 1956 deterred the MSMEs from adopting the corporate form.
The functioning of a proprietorship or a partnership firm is too opaque, making assessment
of credit-worthiness by bankers difficult, and therefore, the MSME sector is at a comparative
disadvantage vis-a-vis corporate bodies in accessing loan/credit facilities from banks and other
financial institutions. A need was felt for a new corporate form that would provide an alternative
to the traditional partnership with unlimited personal liability on the one hand, and the statute-
based governance structure of the limited liability company on the other. In this context, the
Limited Liability Partnership (LLP) Act was enacted in 2008 and came into force from 2009.
LLP is a form of business entity, which allows individual partners to be protected from the
joint and several liabilities of partners in a partnership firm. The liability of partners incurred in
the normal course of business does not extend to the personal assets of the partners. It is capable
of entering into contracts and holding property in its own name. An LLP would be able to fulfil
the compliance norms with much greater ease, coupled with limitation of liability. The corporate
structure of LLP and the statutory disclosure requirements are expected to enable higher access
to credit in the market.
MCA21 — e-Governance Project
The Ministry operated an end-to-end e-governance project called MCA21 for end to end
service delivery comprising Company and Limited Liability Partnership (LLP) registration,
incorporation, registry and other compliance related services. The project was started in March,
2006 on Build, Own, Operate and Transfer (BOOT) Model with the vision was “to introduce a
service-oriented approach in the design and delivery of Government services”. The project was
undertaken on a Mission Mode to bring about a service centric approach in the delivery of public
services and administration of the Companies and LLP Act, and it specifically focuses on: (i)
speedy incorporation of companies and LLPs, and(ii) providing Ease of Doing Business. The
project has been implemented in the Ministry’s headquarters, all Regional Directorates and
Registrar of Companies offices, to bring about a service centric approach in timely delivery of
public services and administration of Companies Act and LLP Act. All services are provided
online and the filed documents are available in public domain.
With the help of e-services, the MCA21 System provides to the stakeholders a convenient,
easy to use and secure access and delivers all MCA services with improved speed and certainty.
It has brought about transparency, speed and efficiency in the functioning of the Ministry. After
successfully launching the next generation SAP based platform version 2 of the MCA21 in
March, 2016, the project has embarked on to a new phase with the objective of improving it