LLP Settlement Scheme 2020

The Ministry of Corporate Affairs has launched a

See Video – https://bit.ly/3aGWOCv

• New Scheme for all the defaulting LLP
• registered till date
• and have given the defaulting LLPs a one-time opportunity to make good their default
• by filing pending documents
• and to act as an LLP compliant in the future
• by introducing the LLP Settlement Scheme, 2020
• by giving Onetime relaxation in waiver of complete additional fees on belated filings.

The LLP Settlement Scheme, 2020 was previously launched vide General Circular No 06/2020 dated 4th March, 2020. And with the launch of Company Fresh Start Scheme 2020 CFSS 2020  it has modified the scheme on 30^th march 2020 with vide scope.

The Objective of the scheme is to:

• Focus and support the defaulting llp
• To give them a fresh start.
• And last opportunity before taking any legal or strict actions against defaulting llp.

Important terms:

1. Defaulting LLP:

Defaulting LLP means an LLP registered under the Limited Liability Partnership Act, 2008 which has defaulted on the filing of documents on the due date(s) specified under the LLP Act, 2008 and the rules laid down therein.

2. Belated Filings

Means all documents/forms which are required to be filed in MCA-21 registry under the act and rules within some due dates and the due dates have passed. They become belated filings.

APPLICABILITY OF THE SCHEME:

The LLP Settlement scheme is applicable

• on all the Defaulting LLP
• having active status as on date. Means defaulting active LLP.
• For all the belated documents/forms (in previous scheme it was including only 4 forms and in modified structure it includes almost 10 forms)
• For which filings are due till 31st August 2020.
• For all belated forms and for any number of years.

NON APPLICABILITY:

• LLP which have been struck off.
• LLPs that have made an application in Form 24to the Registrar, for striking off its name from the register as per provisions of Rule 37(1) of the LLP Rules, 2009.
• For which the due date falls after till 31st August 2020.

TIME PERIOD OF THE SCHEME

The scheme will remain effective or available from 1st April, 2020 till 30th September, 2020 (both days inclusive) pursuant to modification of the scheme vide MCA circular dated 30th March 2020. (Original Scheme was launched from 16th March 2020 till 13th June 2020.)

PROCESS TO BE FOLLOWED

1. File Form DIR3 KYC of all designated partners if din of all the designated partners are Deactivated. (the Penalty of rs 5000 is also waived).
2. The defaulting LLPs may themselves avail of the scheme for filing documents which have not been filed or registered in time on payment of Normal statutory fee.
3. No application, intimation, or form is required to be filed to start with or to avail benefit of the scheme.

What if any defaulting LLPs does not availed this Scheme after conclusion of the same.

• Upon completion of the scheme, the Registrar shall take the necessary action pursuant to the LLP Act, 2008 against LLPs which have not made use of this scheme and are in default of time in filing documents as required under the provisions of the LLP Act, 2008. Default LLPs may be subject to prosecution by the Registrar for such defaults.

BENEFITS OF THE SCHEME;

• Monetary benefits as Huge amount of Additional fees is waived.
• The defaulting LLPs, which have filed their pending Forms and made good the default, shall not be subjected to prosecution by Registrar for such defaults. (immunity from prosection)
• Fresh Start chance.

FORMS COVERED UNDER THE SCHEME:

The modified LLP Settlement scheme dated 30^th March 2020 has covered all the belated forms/document. (almost 10 forms are covered in the modified structure.

The Original scheme was confined only for the 4 forms of LLP.   

Form-3 Filing of LLP Agreement and changes thereon

Form-4 Notice of appointment, cessation, change in name/ address/ designation of designated partners and consent to become partner/designated partner

Form-8 Statement of Account & Solvency

Form-11 Annual return of LLP

FEES TO BE PAID

Under the scheme, for late documents, the LLP shall pay only the statutory filing fees as prescribed by the LLP Act and the rules thereunder, without any additional fee or penalty (Previous version of the scheme was demanding statutory fees along with additional fees of Rs 10 per day, provided that the additional fee for such payment does not exceed Rs 5000/-per document.)

Hope this is article will help you or your clients and clarified the conceptual and procedural Part.

DISCLAIMER: The entire contents have been developed on the basis of relevant information and are purely the views of the authors. Though the authors have made utmost efforts to provide authentic information however, the authors expressly disclaim all or any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document. Reader should seek appropriate counsel for their own situation. I shall not be held liable for any of the consequences directly or indirectly.

Any other suggestions /opinions are welcomed.

Regards;

Author:  CS Megha Sharan (Company Secretary in Practice)

Ezzus India Team