LLP Settlement Scheme – 2020
LLP Settlement Scheme – 2020 is a Onetime relaxation scheme for waiver of additional fees to the defaulting LLPs to make good their default by filing pending documents and to serve as a compliant LLP in future.
Limited Liability Partnership (LLP)
The Limited Liability Partnership (LLP) is viewed as an alternative corporate business vehicle that provides the benefits of Limited Liability but allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement. Owing to flexibility in its structure and operation, the LLP often become the preferred option for small enterprises.
Statutory Filings by Limited Liability Partnership (LLP)
Every LLP is is required to LLP Annual Compliance Filings periodically with the Registrar. To ensure transparency, these returns are available to the public for inspection. The LLP Act made it mandatory for LLPs to file Annual Return (Form-11), Statement of Accounts and Solvency (Form-8) & Income Tax Return.
If the filing is not made within the time stipulated, there will be a fine of is Rs.100 per day after the due date till the date of Filing.
However, it has come to the notice of Government that a large number of LLPs have defaulted in filing the following Forms / Returns:
- Form 3: LLP Agreement and changes therein
- Form 8: Statement of Account & Solvency (Annual or Interim)
- 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 one hundred rupees for every day of such delay under Section 69 of the LLP Act in addition to any fee as is payable for filing of such document or return.
A large number of LLPs are not filing their due statutory documents (i.e. Information with regard to LLP agreement and changes etc., Notice of Appointment of Partner/ Designate Partner etc. and other Annual filing documents i.e. Statement of Account & Solvency and Annual Returns) 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 etc. which are required to be filed with the prescribed fee.
Due to delay and default of non-filing these records, the data 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 completed.
LLP Settlement Scheme – 2020
The Central Government 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) has decided to introduce a scheme namely "LLP Settlement Scheme, 2020", by allowing a One-time condonation of delay in filing statutorily required documents with the Registrar.
As part of Government's constant efforts to promote ease of doing business it has been decided to give a Onetime relaxation in additional fees to the defaulting LLPs to make good their default by filing pending documents and to serve as a compliant LLP in future.
Details of LLP Settlement Scheme – 2020
This scheme shall come into force on the 16th March, 2020 and shall remain in force up to 13th June, 2020.
- "Defaulting LLP" 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
- Any "defaulting LLP" is permitted to file belated documents, which were due for filing till 31st October, 2019 in accordance with the provisions of this Scheme
Payment of fees and additional fee on filing belated document for seeking immunity under the Scheme
The defaulting LLPs may 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, provided that such payment of additional fee shall not exceed Rs. 5,000/ - per document.
Immunity from prosecution
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 subjected to prosecution by Registrar for such defaults.
Applicability of LLP Settlement Scheme – 2020
This Scheme shall ONLY apply to the filing of the following documents:
- 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 (Annual or Interim);
- Form-11- Annual Return of Limited Liability Partnership (LLP).
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.
Consequences of non availing / continuing Default:
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.
LLP Settlement Scheme – 2020
LLP Settlement Scheme – 2020 is a Onetime relaxation scheme for waiver of additional fees