BEYOND THE CORPORATE NET ARE LLPS BECOMING THE NEW FRONTS FOR UNREGULATED DEPOSITS

The Limited Liability Partnership (“LLP”) is a seperate legal entity which is similar to the concept of “Company”. The LLPs in India is governed by the legislation known as the The Limited Liability Partnership Act, 2008. But unlike regular a company, these llp’s standout and offer unique features by combining and providing the aspects of both partnership and company. However, there are visible flaws and grey area within the LLP act which lead to accepting of unregulated deposits and various financial misconducts and transaction between the related parties and how the legislation and governing bodies such as Reserve Bank of India (“RBI”) and Ministry of corporate affairs deals specifically Registrar of Companies (“ROC”) with such issues and how the Banning of Unregulated Deposit Schemes Act, 2019 (“BUDS”) aims to impose an effective ban on unregulated deposit schemes and protect the interests of depositors in India. This paper also aims to provide suggestions and improvements to improve the standards and fix the flaws in the LLP while keeping the key objective of it. The LLP has still been chosen by a niche of professional because of its limited liability feature and its fewer formalities and easier to manage compliance modes, which has been abused by certain individuals who could trigger compliance red flags under the Companies Act. This issue becomes more serious when LLPs are used in largescale financial operations that could possibly mimic company like business models but evade equivalent scrutiny due to lack proper provision regarding compliances in the LLP act. This study recommends policy and structural reforms that ensure transparency and financial accountability in LLPs without compromising their flexibility, thereby preserving their intended purpose as prescribed while minimizing the risk of abuse caused by the exploitation of the provisions of the act. Key words: “Deposits”, “Compliance”, “Flaws”, “LLP”, “Companies Act”.