The pandemic of COVID-19 has created threat to the global economy. The developed economies like USA, Europe, China amongst others are worst affected. The developing countries like India now are under the radar of this invisible yet disastrous creature. The Government of India is taking continuous steps to tackle with the situation. The 21-days lockdown recently announced by the Government is one of those steps, hence creating huge problems for the entire nation including business fraternity & corporates. These kinds of restrictions in itself pose threat to the already depressed economy. In order to boost the economy & give relief to the corporates, the Government has introduced various schemes. One of the recently introduced schemes is LLP SETTLEMENT SCHEME, 2020(“the Scheme”).
The Scheme has been introduced by means of following Circulars of Ministry of Corporate Affairs (MCA):
1. General Circular No. 6/2020 dated 04th March, 2020 (“Old Scheme”) (effective from 16th March, 2020 to 31st March, 2020); &
2. General Circular No. 13/2020 dated 30th March, 2020 (“Modified Scheme”) (effective from 01st April, 2020 to 30th September, 2020).
The purpose of both these schemes is to reduce the compliance burden on the LLPs which have defaulted in filing of any of the statutory forms with the Registrar & hence giving a fresh start to the corporate world of the Country.
The attempt is being made to make all the readers understood the essence of law & that too in simplified manner so that the implementation of the same becomes easy.
{Please note that the provisions of Modified Scheme are covered only as the duration of Old Scheme is already over.}
Frequently Asked Questions (FAQs) on Modified LLP Settlement Scheme, 2020
Q. Who can avail this Modified LLP Settlement Scheme, 2020?
Any LLP which has failed or fails to file any mandatory form with Registrar till 31st August, 2020 may avail this scheme.
Q. When the defaulting LLP can avail Modified LLP Settlement Scheme, 2020?
The duration of the scheme is 01st April, 2020 till 30th September, 2020. So the defaulting LLPs need not to panic as sufficient time is available for them.
Q. Will there be any additional fee payable?
The defaulting LLP which avails the scheme has to pay normal fee only. No additional fee is payable on the delayed filing provided the filing is made till 30th September, 2020.
Q. If a defaulting LLP files the pending form during the currency of the scheme, will it still be liable for prosecution for the default?
No, there will be no prosecution for the LLPs who file their pending forms till 30th September, 2020.
Q. Which forms can be filed under the Modified LLP Settlement Scheme, 2020?
The defaulting LLP can file any form which is due to be filed till 30th August, 2020 like:
1. Form-3 – Information with regard to Limited Liability Partnership Agreement and changes, if any, made therein;
2. 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;
3. Form-8 – Statement of Account & Solvency (Annual or Interim);
4. Form-11 – Annual Return of Limited Liability Partnership (LLP).
Q. Can any LLP which has already applied for Voluntary Strike Off by filing Form 24 apply for Modified LLP Settlement Scheme, 2020?
No, such LLP cannot avail the scheme.
Q. If any LLP doesn’t avail the scheme, what will be the consequences?
The Registrar has been issued directions to take stringent actions against the LLPs who have not filed their due forms till 30th September, 2020. The consequences may be:
1. Normal fee payable on the forms;
2. Additional fee of Rs. 100 per day of default;
3. Action for Strike Off by the Registrar;
4. Prosecution for the Partners & Designated Partners etc.
CONCLUSION
The scheme announced is only a one-time relaxation for the defaulting LLPs to avoid their compliance burden & to give them a fresh start. All the LLPs which advertently or inadvertently have made any mistake in past need to rectify the same by availing this scheme. The purpose is to give the defaulting LLPs a fresh start but the moral, social, ethical & professional responsibility lies on the LLPs to ensure that no such mistake is repeated in the future.
DISCLAIMER
This write up is intended to simplify the recent circular issued by MCA. It is not intended to be a professional advice to anyone therefore Author accepts no responsibility whatsoever and hence no liability can arise for any losses, claims or due to the contents of this write up.
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