In a pointer to economic revival gaining traction post second Covid wave, the number of new companies registered in July saw 22 per cent sequential growth to 15,499 from 12,722 in the previous month.

As many as 15,054 companies were registered as private companies in July and 310 were incorporated as public companies, official data with the Corporate Affairs Ministry (MCA) showed.

In June, 12,423 companies were registered as private and 207 were registered as public companies out of the total 12,722 registered in that month.

LLPs preferred

Meanwhile, MCA Secretary Rajesh Verma, in the monthly newsletter of the ministry for July, highlighted how Limited Liability Partnerships ( LLPs) have become a preferred vehicle for doing business and that their increasing popularity can be perceived from the fact that during 2020-21 there was 17 per cent growth in the number of LLPs incorporated. LLPs are relatively easier to incorporate than a company and with lesser costs. As of July 31, a total of 2.15 lakh LLPs were active in the country.

LLPs are particularly handy for small and medium businesses as well as entrepreneurs as they help them conduct their operations effectively and efficiently. A LLP is a hybrid between a partnership and a company. It provides the benefits of limited liability of a company while giving flexibility of a partnership.

Of the 2.15 lakh active LLPs in the country, services sector accounted for about 74.62 per cent (numbering 160523 units), followed by 23.32 per cent in industry (numbering 50156 units) and 2.06 per cent in Agriculture ( numbering 4433 units).

Economic activity wise classification of LLPs reveal that a large number of LLPs are in business services (76422), followed by Trading (35,294), manufacturing (29,159) and community, personal and social services (20,781).

To further improve the ease of doing business, the Centre had in the recently ended Monsoon session of Parliament amended the Limited Liability Partnership Act 2008 —first time the law got amended since enactment —to primarily decriminalise 12 compound able offences involving minor or technical defaults, omission of one penal provision and shifting another to an alternate mechanism. The latest amendments have also brought LLPs on a level playing field with companies.

The amendments also introduced two new concepts namely ‘Small LLP’ and ‘Start up LLP’. In addition, amendments have reduced the minimum criteria to qualify as ‘resident of India’ from 180 days to 120 days. The amendments have also leveraged the concept of special courts for swift trial of offences under the LLP Act. The recent amendments in the LLP Act will also result in more unorganised and unincorporated forms of businesses shifting to an organised and incorporated business structure, say economy watchers.