Ministry of Corporate Affairs (MCA) has come up with a new scheme namely LLP Settlement Scheme, 2020 for Limited Liabilities Partnerships (LLPs), which are majorly small enterprises and struggle to make their feet stand in today’s sharp competitive market place.  Many times it has happened with these entities that, they do not have enough knowledge or guidance of regulatory norms they need to fulfill; and some time there is core negligence on the compliance part in an organization.

As a result, according to the electronic records maintained by the ministry, there is huge number of LLPs, which have defaulted with the requirement of e-filing with MCA.  This include mainly, Form-3 for Agreement of partnership and changes therein, Form-4 for appointment / cessation or change in name and / or address of partner, Form-8 for Annual Statement of Accounts and Form-11 for Annual Return for LLP.

Currently the default in filing the above mentioned form, the consequential penal amount in addition to the normal filing fees is INR 100/- per day; which is double to the normal fees of INR 50/-.  If an LLP want to wind up a business and if they apply for strike off of its name from register of ROC the have to comply with all the pending compliances with ROC and the penal amount of additional fees @INR 100/- per day cost a huge amount to an entity.  Considering the numbers of non-complying LLPs, MCA has come up with a scheme of relaxation to the penal provision and has provided one chance of window to make an entity fully complied and make the default good.

LLP Settlement Scheme, 2020

Salient features of of LLP Settlement Scheme, 2020

1. The scheme shall be available for the duration starting from 16th March 2020 to 13th June, 2010, both days including.

2. The scheme is available to all LLPs, which has defaulted in filing of Form-3, Form-4, Form-8 and Form-11; which were due to file till 30th October, 2019.

3. An additional fee over and above the normal fees for all the said forms is reduced to INR 10/- per day instead of INR 100/- per day.

4. All the LLPs which have made the default good from 16th March 2020 to 13th June 2020 shall be provided immunity from the prosecution process by ROC for default committed in filing of the said forms. Immunity shall be provided only for Form-3, Form-4, Form-8 and Form-11; any other default or non-compliance shall remain subject to the legal consequence under the LLP Act.

5. This scheme is not applicable to the LLPs which have already filed Form-24 for striking off their name from the register of ROC.

Exemplary depiction:

Let’s understand ABC LLP has defaulted in complying in various requirement of filing forms with ROC, the scenario with and without this scheme will be as follows:

Sr. No. Form Particular Due date of filing* Date of Fling Days delayed in filing Amount of Additional  Penalty
Without benefit of scheme With the benefit of scheme
1 Form-3 Notice Agreement of Partnership and changes therein 01/05/2019 16/03/2020 320 32,000/- 3,200/-
2 Form-4 Notice of appointment  / cessation / change in name or address of partner 31/08/2019 16/03/2020 198 19,800/- 1,980/-
3 Form-8 Statement of Accounts and solvency 30/09/2019 16/03/2020 168 16,800/- 1,680/-
4 Form-11 Annual Return 30/05/2019 16/03/2020 291 29,100/- 2,910/-

* All the dates are illusionary for just the sake of understanding.

Ref: General Circular No. 06/2020 issued by Ministry of Corporate Affairs dated 04th March, 2020.

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May 2021