## Section 39 — Compounding of Offences

### Compounding Authority

Regional Director (RD) = the Regional Director, or any officer not below the rank of RD authorised by the Central Government.

### Sub-section (1) — Power to Compound

RD may compound any offence punishable with fine only by collecting a sum which:

Shall not exceed the maximum fine for such offence, AND
Shall not be less than the minimum fine.

Only fine-only offences are compoundable — not those punishable with imprisonment.

### Sub-section (2) — Bar on Repeat Compounding

No compounding for a similar offence committed within 3 years from the date a similar offence was previously compounded.

Note: A similar offence after 3 years is treated as a first offence again.

### Sub-section (3) — Procedure

Application made to the RoC, who forwards it with his comments to the RD.
After compounding (whether before or after prosecution started), the LLP/partner shall intimate RoC within 7 days.

### Sub-section (4) — Effect

Compounded before prosecution → No prosecution shall be instituted.
Compounded after prosecution → RoC informs court; the offender shall be discharged.

### Sub-section (5) — Direction for Filing Defaulted Documents

While dealing with the proposal, RD may direct DPs/partners/employees to file the defaulted return/account/document.

Non-compliance with RD's order → fine up to twice the fine provided in the corresponding section.

Worked example

### Example 1

Example: An LLP misses filing its Annual Return. The default attracts a fine. RD compounds for ₹40,000 (within the prescribed range). Two years later, the same default recurs.

Answer: The 2nd default cannot be compounded under Section 39(2), as it is a similar offence within 3 years of earlier compounding. RD has no power to compound it.

### Example 2

Example: Same LLP defaults 4 years after the 1st compounded offence.

Answer: Second offence after 3 years is deemed a first offence, hence compoundable.

⚠️ Common exam mistakes

Believing all offences are compoundable — only fine-only offences are.
Forgetting the 3-year bar on repeat compounding of similar offences.
Missing the 7-day intimation deadline to RoC after compounding.
Forgetting that non-compliance with RD's direction attracts twice the corresponding fine.

Reference: Section 39 — Limited Liability Partnership Act, 2008

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Compounding of Offences (Section 39)

Worked example

⚠️ Common exam mistakes