LLP Settlement Scheme as per the General Circular issued by the MCA dated 04.03.2020 via number 06/2020.
LLP or Limited Liability Partnership is a form of business vehicle governed by the Limited Liability Partnership Act, 2008 or LLP Act, 2008 in short, combining the quality attributes of a Company and a Partnership Firm. It gives the liberty of being partners while having a limited liability in the business which creates a distinction between the business assets and personal property unlike the feature of the Partnership Firm.
Limited Liability Partnership Act, 2008 contains provisions in regard to certain mandatory and/or optional or requisite filings to be made by the LLP on the portal of Ministry of Corporate Affairs through prescribed forms along with prescribed fees.
It includes provisions for filing with regard to Limited Liability Partnership Agreement and changes, if any, made therein, Notice of appointment and cessation, Change in name/address/designation of a Designated Partner and consent to become a Designated Partner, Notice for change of name, Statement of account & solvency, Annual Return of Limited Liability Partnership (LLP) among various others.
The Ministry noticed the discrepancies in the filing of the mandatory returns and notices and hence issued this Circular providing an opportunity to file the pending returns with certain exemptions and benefits.
As per the circular issued, the defaulting LLP’s (“defaulting LLP” as defined in the Circular means a 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;) are now given a chance to file the pending documents with one time relaxation in the additional fees, to make good their default.
The defaulting LLP’s 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/ – per day (which is Rs 100/- per day in normal circumstances) 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. Also, along with the benefit of relaxed fees, the defaulting LLP’s who wish to avail the benefit and make good their default shall not be subjected to prosecution by Registrar for such defaults.
The catch in the scheme is that this scheme shall be applicable only on certian specified forms and not all of the filing documents, which are as follows: –
Form 3 Information with regard to 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
Form 11 Annual Return of Limited Liability Partnership (LLP)
To sum up, it can be said that it a great initiative taken up by the Ministry giving a chance to the defaulting LLP’s to clear up their backlog in filing and save themselves from the actions of the Registrar, as we can expect some stringent actions afterwards since the Ministry is seeking to close doors for the shell companies and similar corporate vehicles.
* this scheme shall come into force on the 16th march, 2020 and shall remain in force up to 13th june, 2020. During this period the defaulting LLP’s shal be permitted to file belated documents, which were due for filing till 31st October, 2019.