MCA introduced LLP Settlement Scheme, 2020

The Limited Liability Partnership (LLP) is seen as an option corporate business vehicle that gives the advantages of Limited Liability however permits its members the flexibility of sorting out their internal network as a partnership planted on a jointly arrived agreement. The LLP regularly become the preferred option for small enterprises owing to flexibility in its structure and activity.

The Government has noticed that a large number of LLPs are defaulting in filing of Form (3) that is LLP Agreement and changes in that and statutory return that is basically Form-8 (Statement of Account & Solvency) (Annual or Interim) and Form-11 (Annual Return of LLP).

In the event of requisite forms not being filed within prescribed time presently LLPs may file such documents on payment of additional fee for Rs. 100/- for every day of such delay in addition to any fee as is payable for filing of such document or return. A large number of representations were received from different quarters for waiver of fee or condonation of delay and relaxations in extra fee on the ground of extreme financial burden.

It is also noted that a large number of LLPs are not filing their due statutory documents in a timely manner with the Registrar. Form 3 is filed for filing Information with regard to LLP agreement and changes, if any made therein and Form-4 is for filing Notice of Appointment of Partner/ Designated Partner, his consent so on which are required to be recorded with the prescribed fee.

Because of this, the records available in the electronic registry are not updated and they are not available to the stakeholders for inspection. Further, due to not filing the required documents on time the LLPs and their designated partners are liable for criminal prosecution and the said LLPs cannot be closed till all compliances are finished.

As a part of Government's consistent endeavors to promote simplicity of doing business it has been chosen to make good their default by filing pending documents and to serve as a compliant LLP in future by giving a Onetime relaxation in additional fees to the defaulting LLPs.

The Central Government has decided to issue a scheme named as "LLP Settlement Scheme, 2020", by granting a One-time release of delay in filing legal required documents with the Registrar. This scheme shall come into force on the 16th March, 2020 and shall remain in force up to 13th June, 2020.

Manner of payment of fees and additional fee on filing belated document for seeking immunity under the Scheme - 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 - per day for delay in addition to any fee as is payable for filing of such document or return, furnish that such amount of extra fee shall not more than Rs. 5,000 - per document.

Immunity from prosecution in respect of document(s) filed under the scheme - The defaulting LLPs, which have filed their pending documents till 13th June 2020 and made good the default, shall not be levy to pursuit by Registrar for such defaults.

Scheme not to apply to certain documents-

1. Form-3: Data with the view to limited liability partnership agreement and adjustments, if any, made in that respect;

2. 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;

3. Form-8: Statement of Account & Solvency (Annual or Interim);

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

5. This Scheme shall 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.

On the conclusion of the Scheme, the Registrar will make vital move under the LLP Act, 2008 against the LLPs which have not benefited this Scheme and are in default in recording or filing of documents as compulsory under the provisions of LLP Act, 2008 in an up-to-date way.

Shruti

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