LLP SETTLEMENT SCHEME A SAVIOUR FOR SMALL ENTREPRENEUR’S

It is a tremendous initiative taken by the ministry to provide relief to law abiding LLP’s during this pandemic situation caused due to COVID-19. As part of Government's constant efforts to promote ease of doing business it has been decided to give a Onetime relaxation by paying no additional fees to the defaulting LLPs to make their default good by filing proper returns and documents.

LLP Settlement Scheme has come into the force with the aim to help the defaulting LLP’s and the LLP’S who are in continuation of default. It has been came to the notice of government that a large number of LLP’S had defaulted in the forms like FORM 3, FORM 4, FORM 8 and FORM 11 or any other documents to be filed in MCA-21 registry under LLP Act 2008 and due the penalty structure i.e. INR 100 per day as well as their financial crisis, the partners are not able to run their business and not even able to close their business. Some of the Key highlights of the scheme are mentioned below.

Attributes related with this scheme

1. This scheme shall come into force with effect from 1^st April 2020 and shall remain into force upto 30^th September 2020 or any time declared by the ministry from time to time.
2. Defaulting LLP’s means which has made default in filing of any documents or return which were due for filing till 31^st August 2020.
3. There will be no additional fee charged as penalty on filing of any of the form which were due already and has not been filed till the date. Only the form fee shall be charged as it will be charged if one is filing at their due time.
4. All the defaulting which has make their default good till the last date of scheme shall never be prosecuted or inspected by  the registrar for such defaults.
5. The modified scheme is not applicable to the LLP’s which have made an application to registrar for removing the name of LLP from the register of the LLP’s.
6. The immunity of no additional fee is only for delayed filings to MCA-21 and not for any substantive violation of law. Any violation of law cannot be cure or make good.

Scheme benefits provided

1. No legal actions: There will no prosecution or legal actions taken today nor in Future, if any defaulting LLP’s attempts to make their default good.

2. Good scheme to save your money: It is correctly said that there’s always a hope after disaster, this scheme is a hope for all those entrepreneurs who may lose their hope of having compliant business. This scheme is providing benefits to such small startups of doing their defaults good.
3. Become a compliant LLP: It will be a good start to convert your defaulting LLP into a compliant one. The scheme is providing the benefit of making your actions done earlier to be good. As one is well aware that the penalty or legal actions are worsen than become negligent towards compliance. 

Key highlights of scheme

1. Validity of scheme-Any applicant can avail the benefit of this scheme from 1^ST April, 2020 to 30^th September, 2020.
2. Applicability-The scheme is applicable to the defaulting LLP’s who has not filed its documents or returns which were due for filing till 31^st August 2020. Hence if any person is doing default after 31^st August 2020, the penalty shall remain same as it was earlier i.e. 100 rupees per day.
3. No additional fee or penalty-The defaulting LLPs may themselves avail the benefit of the scheme for filing documents or returns which have not been filed or registered in time by paying a nominal Form Fee and therefore no additional fee or penalty shall be levy.
4. Relaxation from legal actions-The relaxation of no prosecution is for those defaulting LLPs who shall file their pending documents till 13^th June 2020 and make their evasion acceptable. They shall not be prosecuted by Registrar for such defaults. This means that Registrar shall take no action or impose any penalty further once the LLP has made their default good.
5. Who are not part of this scheme- This Scheme shall not be appropriate for Limited liability partnership firms which has made a submission in E-form 24 to the registrar of LLP for name of removal from the registry as per LLP rules.

Frequently asked question

1. When the scheme shall come into force?

The scheme shall come into force with effect from 1^st April, 2020 and shall remain in force till 30^th September, 2020.

2. What is the main objective of the scheme?

The Ministry of Corporate Affairs in continuation of government’s constant efforts to promote ease of doing business it has been decided to give just once relaxation in extra fees to the defaulting LLPs to make fresh start by filing pending documents and to serve as a obedient LLP firm in future.

3. Which LLP can avail the benefit of the scheme?

All the defaulting Limited liability partnership firms who failed to fulfill the obligatory compliances is allowable to file delayed documents, which were outstanding for filing till 30^th August, 2020 in harmony with the requirements of this scheme.

4. Do the scheme grants immunity from prosecution in respect of documents filed under scheme?

All the evaded firms which have filed their deferred documents and fulfills the obligatory compliances before September 30, 2020 and made good the default shall not be subjected to any action by the Registrar for such defaults. 

5. Whether the scheme is permanent?

No, it is one time relaxation from the Department to make good the defaults.

Misconceptions of CFSS, 2020

1. LLP settlement scheme is pertinent to LLP’s which has applied for strike off

This scheme shall not be applicable to the LLP’s who have applied for striking off the name from register under LLP Act 2008.

2. Defaulting LLP’s shall be liable for legal actions as well

This is not true, the LLP settlement scheme settles with if one made good all the default after filling belated documents, the LLP shall not be subjected to any prosecution by the registrar of LLP’s.

3. Scheme is waived off by ministry once COVID-19 pandemic situation is over

It is incorrect; the scheme valid till 30^th September, 2020, applicant can make their evasion good without paying any supplementary charges or penalty.

Conclusion:

Consequently to bring to a close on the above matter the ministry has release the notification stating that the resistance is provided only against the deferred filings and not against any infringement of rules and regulation of LLP. NeuSource Startup Minds India Limited hereby helps you in getting immune through making you an active compliant once again with a fresh start.

The Neusource Startup Mind is the finest business startup consultant that offers various services of compliances along with the registration like Proprietorship Firm compliances, Partnership Firm compliances, LLP compliances, Company compliances, GST compliances etc. 

Akash Rai

"Any time is a good time to start a company.” Neusource indulge in providing business consultancy services which help startups to accomplish their desired results as a TAJ EXPRESS. If you’re passionate about something and you work hard, then neusource is the right choice for you.