# Compounding of Offences [Section 39]

## Who Can Compound — and What

### Filing the Application

Application for compounding shall be made to ROC.
ROC shall forward it (along with his comments) to the Regional Director (RD) or any other officer not below the rank of RD authorised by the CG.

### What Can Be Compounded

Only offences punishable with FINE ONLY may be compounded.

### Amount Payable

The RD/authorised officer may compound by collecting:

Not lower than the minimum fine, AND
Extendable up to the maximum fine

…prescribed for that offence.

## The 3-Year Bar (Anti-Recidivism Rule)

An offence committed by an LLP, Partner or DP within 3 years from the date of compounding of its similar offence CANNOT be compounded again.

## Intimation After Compounding

If an offence is compounded, intimation shall be given to ROC within 7 days of compounding.

## Prosecution After Compounding

### If Compounded BEFORE Institution of Prosecution

No prosecution shall be instituted.

### If Compounding Happens AFTER Institution of Prosecution

ROC shall bring the compounding to the notice of the court where prosecution is pending.
On such notice, the offender is discharged.

## Power to Direct Compliance

RD/authorised officer may also direct a Partner, DP or Employee to file/register a return, account or document within time specified in the order.

### Consequence of Non-Compliance with such Order

If the person fails to comply — maximum fine for the offence will be TWICE the amount otherwise provided under the section.

Worked example

### Example 1

Q: XYZ LLP committed an offence punishable with fine of ₹10,000 to ₹50,000. It applied for compounding. Can the RD compound it?

A: Yes. The offence is fine-only and hence compoundable. RD may compound by collecting between ₹10,000 (minimum) and ₹50,000 (maximum).

### Example 2

Q: ABC LLP had a similar offence compounded on 1-Jun-2024. The same type of offence is again committed on 1-Mar-2026. Can it be compounded?

A: No. Less than 3 years have elapsed since the prior compounding (just ~21 months). Under Section 39, a similar offence within 3 years cannot be compounded.

### Example 3

Q: An offence was compounded after prosecution had been instituted in court. What happens to the prosecution?

A: ROC shall bring the fact of compounding to the notice of the court. On such notice, the offender is discharged.

⚠️ Common exam mistakes

Believing offences punishable with imprisonment can also be compounded — only FINE-ONLY offences are compoundable.
Confusing the limitation — it is 3 years from the date of compounding of a similar offence (not from commission).
Stating the post-compounding intimation period as 30 days — it is 7 days to ROC.
Overlooking the 'twice the fine' enhancement when the person fails to comply with the RD's compliance direction.

Bare-Act text Section 39 · The Limited Liability Partnership Act, 2008 · click to expand

Section 39 - Compounding of offences: The Regional Director or any other officer not below the rank of Regional Director authorised by the Central Government may compound any offence under this Act which is punishable with fine only, by collecting from a person reasonably suspected of having committed the offence, a sum which may extend to the amount of the maximum fine prescribed for the offence. Provided that any offence which is committed by a LLP or its partner or its designated partner within a period of three years from the date on which a similar offence committed by it was compounded under this section shall not be compounded.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →