The Central Government in exercise of its power u/s 460 of the Companies Act, 2013 has now been extended to LLPs with effect from 30th January, 2020 vide Gazette Notification No. G.S.R. 59 (E) Dated 30th January, 2020 u/s 67 (2) of the Limited Liability Partnership Act, 2008 and has decided to introduce a scheme namely ‘LLP Settlement Scheme, 2020‘ (LLP Amnesty Scheme), by allowing a One-time condonation of delay in filing statutorily required documents with the Registrar.
BACKGROUND:
LLP Settlement Scheme, 2020 is being introduced in pursuance of the Government’s objective of providing greater Ease of Living to the citizens of the country and is expected to provide significant relief and a window of opportunity for LLPs to abide by the Law & conduct business accordingly.
APPLICABILITY FOR AMNESTY SCHEME:
The scheme – LLP Amnesty Scheme, will come into force on March 16, 2020 and shall remain in operation till June 13, 2020. During this period, there would be one-time condonation of delay in filing statutorily required documents with the Registrar of Companies.
“The scheme is applicable to a “Defaulting LLP”. Defaulting LLP means those LLP Registered under LLP Act, 2008 and made default in filing of certain documents due for filing till October 31, 2019.
It would be applicable to a “Defaulting LLP” for filing overdue documents, which were due for filing till October 31st, 2019 on a payment of a nominal additional fee of Rs. 10/- per day for the period of delay, in addition to any fee as is payable for filing of such document or return, subject to a maximum amount of Rs. 5,000/- as the additional fee per document.
The Scheme shall apply to the filing of the following overdue documents:
- Form-3– Information with regard to the limited liability partnership agreement and changes, if any, made therein;
- Form-4– Notice of appointment, cessation, change in name/ address/designation of a designated partner or partner and consent to become a partner/designated partner;
- Form-8– Statement of Account & Solvency (Annual or Interim); and
- Form-11– Annual Return of Limited Liability Partnership (LLP).
NON- APPLICABILITY:
This Scheme shall not apply to the filing of following documents:-
i. This Scheme shall not apply to LLPs which has made an application in Form 24 to the Registrar, for striking off its name from the register as per provisions of Rule 37(1) of the LLP Rules, 2009.
ii. LLPs made default in filing of certain documents due for filing after October 31st, 2019.
FEE STRUCTURE:
To reduce the burden on LLPs, they would be required to pay only Rs.10 as additional fee for each day delay in filing documents as against the earlier practice of Rs. 100 for each day of delay. The penalty on delayed filing will also be capped to a maximum of Rs. 5,000 providing relief to LLPs, some of whom have not filed their documents for years.
For instance, if the LLP incorporated in the year January, 2016, erroneously didn’t file the e form 3 and due to this initial default it couldn’t file the belated or current Annual filings as on October 31, 2019 i.e. e Form 8 and e Form 11 of the LLP, the total approximate fees would as on date would be approximate between Rs. 3,70,000 to 3,80,000 and the penalty of Rs. 100/- per document would still continue.
Post the LLP Amnesty Scheme, 2020, all the three documents can be filed for maximum Rs. 15,000/- total for all the three aforesaid e forms, with a maximum cap of Rs. 5,000 per document, and the difference between the penalty amounts in both the scenarios runs into lacs which is a cost saviour to the LLP.
BENEFIT FOR AVAILING THE SCHEME
The major benefits that the defaulting LLPs can avail, which have filed their pending documents till June 13th, 2020 and made good the default, shall not be subjected to criminal prosecution by Registrar for such defaults and waiver of huge penalties which can run into lakhs of rupees.
The MCA received representations from various quarters on waiver of fee or condonation of delay and relaxations in additional fee on the ground of excessive financial burden. Many firms have a capital of Rs 1 lakh and have penalties amounting to Rs 2-3 lakh, which stops them from approaching for a solution due to the high penalty amount.
The one-time scheme corrects this and is one time opportunity to correct the belated filings with a nominal penalty amount which has a ceiling amount and safeguard the interest of the Designated Partners/Partners and the LLP from any further prosecution or liability.
India has around 1.25 lakh active LLPs, of which a majority are in business services, followed by trading, manufacturing and real estate & renting. This one-time scheme benefits around 25,000-30,000 LLPs that have a capital base of around Rs 1 lakh.
HOW JAYA SHARMA & ASSOCIATES CAN GUIDE?
We at JS&A provide one stop solution as a consultancy and compliance firm providing Corporate and Secretarial Services.
We will help you to avail the benefit to the LLP amnesty scheme, 2020.
You can get in touch with your Compliance Manager/Associate at any point of time and get assistance on matters related to your LLP’S compliance.
Mehul Solanki Associate Jaya Sharma & Associates jaya@jsa-cs.com
Jatin Gade Associate Jaya Sharma & Associates bodha@jsa-cs.com
For further details you can contact us at bodha@jsa-cs.com or call us at 9757113889.
Source: https://taxguru.in/corporate-law/llp-settlement-scheme-2020.html
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