LLP Settlement Scheme, 2020- Scope, Objective, Validity, Applicability

The Limited Liability Partnership (LLP)  is required to file periodic returns, information, apart from event based transactions, with the Registrar of Companies  via www.mca.gov.in. Such information filing relates to filing of LLP Agreement, Change in LLP Agreement [ LLP 3], Changes in Partners / Designated Partners [LLP 4],  Statement of Account & Solvency (Annual or Interim) [Form-8],   Annual Return of LLP [Form 11] and other documents in compliance with LLP Act 2008. The related e forms  have to be filed within the prescribed period time, failure to which,  LLPs may file such documents on payment of additional fee of   one hundred rupees for every day of such delay [ Section 69 of the LLP Act] in addition to any fee as is payable for filing of such document or return.

Due to non filing of returns  /  documents / information, the records available in the electronic registry are not updated and they are not available to the stakeholders for inspection. Likewise, Designated Partners are liable for criminal prosecution for the default committed to LLP.

Based on large number of representations from stakeholders  for waiver of fee or condonation of delay and relaxations in additional fee on the ground of excessive financial burden and considering the objective of ease of doing business by the Government, the Central Government has in exercise of its power u/s 460 of the Companies Act, 2013 (extended to LLPs vide Gazette Notification No. G.S.R. 59 (E) Dated 30th January, 2020 u /s 67 (2) of the Limited Liability Partnership Act, 2008) introduced a scheme namely “LLP Settlement Scheme, 2020”, vide General Circular No. 06/2020 dated 4^th March, 2020,  by allowing a One-time condonation of delay in filing statutorily required documents with the Registrar.

Following are the key features of the “LLP Settlement Scheme, 2020“

Scope, Objective and validity of the LLP Settlement Scheme, 2020

“LLP Settlement Scheme, 2020″ is a scheme to give a One Time relaxation in additional fees to the defaulting LLPs to make good their default by filing pending documents viz. Form Nos 3, 4, 8 and 11,   introduced by The Ministry of Corporate Affairs, as part of Government’s constant efforts to promote ease of doing business, by allowing a One-time condonation of delay in filing statutorily required documents with the Registrar and to enable the LLP as a compliant LLP in future.

Effective date of the LLP Settlement Scheme, 2020

The Scheme is effective from 16 March, 2020  up to 13 June, 2020 (both days inclusive).

Applicability of the LLP Settlement Scheme, 2020

The LLP Settlement Scheme, 2020 is  applicable to LLP registered under the Limited Liability Partnership Act, 2008, which has made a default in filing of documents on the due date(s) specified under the LLP Act, 2008 and rules made there under and pertains to filing of documents which were due for filing till 31st October, 2019 in accordance with the provisions of this Scheme.

List of documents  to which LLP Settlement Scheme, 2020 applies;

The Scheme applies  for filing of only the following documents which were due for filing till 31st October, 2019

(i) Form-3- Information with regard to limited liability partnership agreement and changes, if any, made therein;

(ii) 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;

(iii) Form-8; Statement of Account & Solvency (Annual or Interim);

(iv) Form-11- Annual Return of Limited Liability Partnership (LLP).

This Scheme does 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.

Manner of payment of fees and additional fee on filing belated document for seeking immunity under LLP Settlement Scheme, 2020 –

The defaulting LLPs may themselves avail of the scheme for filing documents which have not been filed or registered in time on payment of additional fee Rs 10/- [Rupees Ten]  per day for delay in addition to any fee as is payable for filing of such document or return, provided that such payment of additional fee shall not exceed Rs. 5,000/ – per document.

It may be noted that additional fee of Rs 10 per day is payable per document and not in aggregate. Thus, if there is there is delay of 100 days for one form and 150 days for another form, then for the form where delay is 100 days, additional fee will be Rs. 1,000 and for another form where delay is for 150 days, additional fee will be Rs. 1,500. Likewise, total amount of additional fee shall not exceed Rs. 5,000.00 per document, e.g. if there is there is delay of 740 days for then additional fee for the form at the rate of Rs. 10 per day works out to Rs. 7,400  which is more than Rs. 5,000 and therefore additional fee will be Rs. 5,000 for the form.

Effect of “The LLP Settlement Scheme, 2020″

√ Filing of applicable belated documents with maximum additional Rs. 5,000.00 [ Rupees Five Thousand] per documents.

√ Enables the LLP as a compliant LLP in future.

√ The defaulting LLPs, which have filed their pending documents till 13 June 2020 and made good the default, shall not be subjected to prosecution by Registrar for such defaults.

√ On the conclusion of the Scheme, the Registrar shall take necessary action under the LLP Act, 2008 against the LLPs which have not availed this Scheme and are in default in filing of documents as required under the provisions of LLP Act, 2008 in a timely manner. The defaulting LLPs may be subjected to prosecution by Registrar for such defaults.

Thus, the Scheme is a One Time opportunity to the defaulting LLPs to  make good their default by filing pending documents so as to avoid  necessary action against the LLPs including prosecution by Registrar.