What is the compounding fee for LLP defaults?

Set at discretion of RD or NCLT — typically a fraction of the maximum fine, considering the default period, LLP size, and remediation steps already taken.

Does compounding protect Designated Partners from prosecution?

Yes. A valid compounding order bars prosecution of both the LLP and named Designated Partners for the compounded offence.

Form 31 – Compounding of LLP Offences Under LLP Act 2008 | NDS Avla

Form 31 – Compounding of LLP Offences Under Section 39 of the LLP Act 2008

Q: Which LLP offences can be compounded?

All offences punishable only with a fine — including Form 11/Form 8 non-filing, registered office default, partner change reporting failure. Fraud and imprisonment offences cannot be compounded.

Avoiding LLP Prosecution Through the Compounding Mechanism — Application to Regional Director or NCLT for Settlement of LLP Compliance Defaults

Compounding is the legal process of settling an offence by paying a prescribed sum to the relevant authority, in lieu of facing prosecution in court. Under Section 39 of the LLP Act 2008, an LLP or its Designated Partners that have committed a compoundable offence under the Act can apply for compounding using Form 31 — filed with the Regional Director (RD) for offences carrying a fine below ₹5 lakh, or with the National Company Law Tribunal (NCLT) for offences carrying a higher fine.

Compounding under Section 39 is available only for offences that are punishable with a fine (not imprisonment). Offences that carry imprisonment as a punishment — such as fraudulent conduct of business under Section 30 — cannot be compounded. Successfully compounded offences are treated as settled: no prosecution can be initiated for that offence by the ROC, and the compounding order serves as a permanent record of the settlement.

Our Form 31 Compounding Services

Offence Assessment

Reviewing the specific LLP Act violation — missed Form 11 or Form 8 filings, failure to maintain registered office, partner change reporting default — to determine whether it is compoundable under Section 39 and the applicable compounding authority (RD or NCLT).

Compounding Application Drafting

Drafting the Form 31 compounding application — specifying the offence, the period of default, the reason for default, evidence of subsequent compliance (e.g. belated filings now made), and the relief sought — for submission to the RD or NCLT.

Compliance Clearance

Ensuring all underlying defaults are rectified before the compounding application is filed — filing all pending forms, paying all late fees, and bringing the LLP to full compliance as a prerequisite for a favourable compounding order.

Representation Before RD / NCLT

Attending hearings before the Regional Director or NCLT on behalf of the LLP and its Designated Partners — presenting the facts, mitigating circumstances, and the compliance steps already taken — to secure the lowest possible compounding fee.

Compounding Fee Payment

Calculating the likely compounding fee, advising on payment mode, and ensuring timely payment after the compounding order is issued — to complete the compounding process and obtain the final settlement order.

ROC No-Prosecution Confirmation

After the compounding order is issued and fee paid, obtaining confirmation from the ROC that no prosecution will be initiated for the compounded offence — and maintaining the order for the LLP's compliance records.

Compounding Authority — RD vs NCLT

Particulars	Regional Director (RD)	NCLT
Applicable offences	Offences with fine up to ₹5 lakh	Offences with fine above ₹5 lakh
Filing form	Form 31	Form 31 (to NCLT)
Processing time	Typically 30–90 days	Typically 2–6 months
Hearing required	Yes — applicant may be called	Yes — formal bench hearing
Compounding fee	Set by RD — typically a fraction of maximum fine	Set by Tribunal

⚠️ Compounding is not available for repeat offenders — an offence cannot be compounded if the same person was compounded for the same type of offence within 3 years of the new offence. It is also not available if the ROC has already filed a prosecution complaint in court for the same default.

Frequently Asked Questions

Which LLP offences can be compounded under Section 39?

Section 39 permits compounding of all offences under the LLP Act 2008 that are punishable only with a fine — not imprisonment. Compoundable LLP offences include: failure to file Form 11 (Annual Return) or Form 8 (Statement of Account), failure to maintain a registered office, failure to report partner changes, failure to file an LLP Agreement, failure to display the LLP name at its office, and similar compliance defaults. Offences involving fraud, fraudulent conduct, or misconduct that carry imprisonment are not compoundable.

What is the typical compounding fee for LLP defaults?

The compounding fee is set by the Regional Director or NCLT at their discretion — it is generally a fraction of the maximum fine prescribed for the offence, taking into account the severity of the default, the period of non-compliance, the size of the LLP, and the steps already taken by the LLP to rectify the default. For routine annual filing defaults (Form 11, Form 8), compounding fees are often significantly lower than the late fees already paid plus the maximum prescribed fine. Our team provides a realistic estimate of likely compounding fees before the application is filed.

Does a compounding order protect the Designated Partners from personal liability?

Yes. A valid compounding order under Section 39 of the LLP Act protects both the LLP and its Designated Partners (and any other officers mentioned in the compounding application) from prosecution for the compounded offence. Once the compounding order is issued and the compounding fee is paid, the offence is treated as settled — the ROC cannot initiate or continue any prosecution for that specific default. This is why compounding is a valuable remedy for Designated Partners who would otherwise face personal criminal prosecution for the LLP's compliance failures.

Facing Prosecution Risk for LLP Defaults? Compound Before It Escalates.

Our team assesses compoundability, files Form 31 with all required documentation, represents you before the Regional Director or NCLT, and secures the compounding order — protecting you and your LLP from prosecution.

Apply for LLP Compounding