Brief on LLP settlement scheme, 2020

Meaning of LLP:

As per Section 2(n) of Limited Liability Partnership Act, 2008, an LLP means a partnership formed and registered under this Act.

As per Section 3 it is :

A body corporate formed and incorporated under this Act and is a legal entity separate from that of its partners.
A limited liability partnership shall have perpetual succession.
Any change in the partners of a limited liability partnership shall not affect the existence, rights or liabilities of the LLP.

Issues that led to the birth of LLP SETTLEMENT SCHEME, 2020:

Hustle of paying additional fees of INR 100/day for every day of delay u/s 69 in addition to any fees as is payable for filing such doc or return by defaulting LLPs.	Due to excessive financial burden, representations made for waiver of fee or condonation of delay and relaxation in additional fees.
Unavailability of records for inspection because of failure in filing statutory returns.	LLPs and designated partners were liable for criminal prosecution.
Unable to close LLPs until all compliances are completed.

Birth of LLP SETTLEMENT SCHEME, 2020:

Central Government u/s 460 of the Companies act, 2013 vide Gazette Notification No. G.S.R. 59(E) dated 30th January, 2020 u/s 67(2) of LLP Act, 2008 introduced a scheme namely ‘LLP SETTLEMENT SCHEME, 2020’ by allowing a one time condonation of delay in filing statutorily required docs with the Registrar.

MCA vide its circular No. 6/2020 dated 4th March, 2020 clarified about the Scheme as follows:

1.Came into force

16^th March, 2020 till 13^th June, 2020.

2.Applicability

Belated docs ( *Form-3, Form-4, Form 8, Form 11) to be filed by defaulted LLP which were due for filing till 31^st October, 2019.

3.Non-Applicability

As per provisions of Rule 37(1) of LLP Rules, 2009, those LLPs which made an application in Form 24 to the Registrar for striking off its name from the register.

4.Manner of Payment of fees and additional fees

Defaulting LLPs have to pay an additional fees of INR 10/day for delay in addition to fees as applicable , payment of additional fees shall not exceed INR 5000/document.

5.Punishment

Prosecution by Registrar against defaulting LLPs after 13^th June , 2020.

*Note

Form 3 for LLP Agreement and changes therein.
Form 4 for Notice of appointment, cessation, change in name/address/designation of a designated partner/partner and consent to become a partner/designated partner.
Form 8 for Statement of Account & Solvency.
Form 11 for Annual Return of LLP.

DISCLAIMER: This is based upon the relevant provisions. In no event I shall be liable for any direct or indirect result of this Article. Its a knowledge sharing initiative.

(Author – Deepna Babal, Company Secretary from New Delhi can be contacted at csdeepnababal@gmail.com).