Business Law II: Companies Act, LLP, Competition, IT, RTI, Intellectual Property and GST

The Limited Liability Partnership Act, 2008 created a hybrid: a body corporate with perpetual succession and a legal personality separate from its partners, in which every partner's liability is limited to the agreed contribution and no partner is liable for another's unauthorised acts — the partnership's flexibility with the company's shield. An LLP needs at least two partners and no maximum; at least two must be designated partners, individuals responsible for compliance, and at least one of them must be resident in India. An individual or a body corporate may be a partner. The mutual rights and duties are governed by the LLP agreement or, failing one, by the First Schedule. The LLP is taxed as a partnership firm, need not audit its accounts below turnover and contribution thresholds set by rule, and cannot raise capital from the public.

1. Obtain a Designated Partner Identification Number and digital signatures for the designated partners (the DPIN is now allotted with the DIN).
2. Reserve the name with the Registrar; it must end 'Limited Liability Partnership' or 'LLP' and not resemble an existing name or trademark.
3. File the incorporation document (form FiLLiP) with the registered office address, partners' consent and a statement by a professional that the Act has been complied with.
4. Certificate of incorporation is issued by the Registrar; the LLP exists from that date.
5. File the LLP agreement within 30 days of incorporation; a firm, private company or unlisted public company may instead convert into an LLP under the Second, Third and Fourth Schedules.

The Competition Act, 2002 replaced the Monopolies and Restrictive Trade Practices Act of 1969 on the recommendation of the Raghavan Committee, shifting the law's aim from curbing monopolies as such to promoting and sustaining competition, protecting consumers and ensuring freedom of trade. It is enforced by the Competition Commission of India, a body of a chairperson and up to six members whose orders are appealed to the National Company Law Appellate Tribunal (since 2017) and then the Supreme Court. Section 3 prohibits anti-competitive agreements and presumes an appreciable adverse effect for horizontal agreements that fix prices, limit output, share markets or rig bids — cartels — while vertical agreements such as tie-in, exclusive supply or distribution, refusal to deal and resale price maintenance are judged by their effect. Section 4 prohibits abuse of a dominant position — dominance itself is lawful — by unfair pricing including predatory pricing, limiting production, denying market access, or leveraging one market to enter another. Sections 5 and 6 regulate combinations — mergers, acquisitions and amalgamations above asset and turnover thresholds — which must be notified to the Commission and cannot take effect until approved or 210 days pass. The Commission may impose a penalty of up to 10% of the average turnover of the preceding three years, and up to three times profit or 10% of turnover per year of a cartel, and runs a lesser-penalty (leniency) scheme for cartel whistle-blowers. The 2023 amendment added a deal-value threshold for combinations, settlement and commitment mechanisms, and a shortened 150-day review.

The Information Technology Act, 2000 was enacted to give legal recognition to transactions carried out by electronic data interchange and other means of electronic communication — 'electronic commerce' — and to electronic records and digital signatures, following the UNCITRAL Model Law on Electronic Commerce of 1996. Electronic records satisfy any legal requirement of writing (s. 4), an electronic signature satisfies a requirement of signature (s. 5), and government filings may be made electronically (s. 6). The Controller of Certifying Authorities licenses the certifying authorities that issue digital signature certificates; adjudicating officers of at least Director rank decide contraventions involving claims up to five crore rupees; appeals go to the Telecom Disputes Settlement and Appellate Tribunal (which absorbed the Cyber Appellate Tribunal in 2017); and CERT-In, the Indian Computer Emergency Response Team, is the national agency for cyber-security incident response under section 70B. The 2008 amendment, in force from October 2009, rewrote the offences, introduced 'electronic signature' as a technology-neutral term, made intermediaries safe where they exercise due diligence (s. 79), and added section 66A, which the Supreme Court struck down as unconstitutionally vague in Shreya Singhal v Union of India (2015).

The Right to Information Act, 2005 gives every citizen the right to information held by or under the control of public authorities, to promote transparency and accountability and to contain corruption, and it replaced the Freedom of Information Act of 2002 that had never been brought into force. Every public authority — any body established by the Constitution, by law, or by government notification, including bodies substantially financed by government — designates Public Information Officers and must proactively publish seventeen categories of information under section 4. A request may be made in writing or electronically, with a fee of ten rupees at the Centre and no fee for persons below the poverty line; the applicant need give no reason. Information must be supplied within 30 days, within 48 hours where it concerns the life or liberty of a person, and within 35 days where the request was routed through an Assistant PIO; a request refused or unanswered goes to a first appeal before a senior officer within 30 days and a second appeal to the Central or State Information Commission within 90 days. Section 8 exempts information that would prejudice sovereignty, security or foreign relations, is forbidden by a court, would breach parliamentary privilege, is commercial confidence or trade secrets, received in fiduciary relationship, from a foreign government, would endanger a source, impede investigation, is Cabinet paper before the decision is taken, or is personal information with no public interest — but information that cannot be denied to Parliament cannot be denied to a citizen, and most exemptions lapse after 20 years. Section 24 excludes the intelligence and security organisations in the Second Schedule, except for allegations of corruption and human-rights violation. The Commission can impose a penalty of 250 rupees a day up to 25,000 rupees on a PIO who refuses or delays without reasonable cause.

Beyond the three, India protects industrial designs (Designs Act, 2000; 10 years plus one renewal of 5), geographical indications (Geographical Indications of Goods Act, 1999; 10 years renewable — Darjeeling tea was the first registration), semiconductor layouts, plant varieties (Protection of Plant Varieties and Farmers' Rights Act, 2001) and trade secrets through contract and common law. The system is administered by the Controller General of Patents, Designs and Trade Marks under the Department for Promotion of Industry and Internal Trade, and the Intellectual Property Appellate Board was abolished in 2021 with its jurisdiction moved to the High Courts. India is a member of the WTO's TRIPS Agreement, the Paris and Berne Conventions, the Patent Cooperation Treaty and the Madrid Protocol for international trademark filing; a National IPR Policy was adopted in 2016. The emerging issues the syllabus flags are the patentability and authorship of work created by artificial intelligence, protection of traditional knowledge and biodiversity (the Traditional Knowledge Digital Library, and access-and-benefit-sharing under the Biological Diversity Act), compulsory licensing of medicines and the balance with public health, standard-essential patents and fair licensing, and enforcement against online piracy and counterfeiting.

The Goods and Services Tax is a destination-based, multi-stage tax on the supply of goods and services with credit for tax paid at every earlier stage, so that tax falls only on value added and the cascading of the earlier regime is removed. It was enabled by the Constitution (One Hundred and First Amendment) Act, 2016 — Article 246A gives concurrent power to the Union and the States, Article 269A governs inter-State supplies, and Article 279A creates the GST Council — and came into force on 1 July 2017, subsuming central excise, service tax, additional customs duties, State VAT, entry tax, luxury tax, entertainment tax and octroi. Alcohol for human consumption is outside GST by the Constitution; petroleum products, natural gas and aviation fuel are inside it but taxed at a rate of nil until the Council decides otherwise; electricity and stamp duty stay with the States. Its objectives were one nation, one tax, one market; the removal of cascading; a wider base; simpler compliance through a common portal; and higher revenue through better compliance. Its benefits are lower overall tax burden on final consumers, seamless input tax credit across the country, uniform rates and procedures across States, removal of check-posts and faster movement of goods, and formalisation of the economy.