The Ministry of Corporate Affairs vide circular no. 06/2020 dated 04.03.2020 has brought up the forever demanded LLP amnesty scheme with the name “LLP Settlement Scheme, 2020” in respect of overdue statutory filings and compliances by the active LLPs. It is almost over a decade that Limited Liability Partnership structure had been introduced in India that allows its members (partners) the flexibility of organizing their internal structure as a partnership based on mutually arrived agreement. Owing to its flexible structure and operation, it became preferred option for small enterprises who wants to do businesses in an organized manner but don’t wanted to opt for Company as the Company structure needed more compliance and hence cost.
One of the very first compliance to be done by a LLP after its incorporation is to file the partnership deed with the MCA21 registry through Form-3 LLP within 30 days of incorporation. It has been observed that many of the LLPs incorporated under LLP Act, 2008, due to one reason or another, have not filed Form-3 LLP. Since past 3-4 years, as a system control, the MCA21 registry doesn’t allows to file annual Form-8 and Form-11 to any LLP whose Form-3 has not been filed. This has led to non-compliance of multiple forms and a hefty amount of additional fees calculated at Rs. 100/- per day per form. Unlike, the Companies, where the additional fees to be paid on delayed filing of any form is limited to multiple times* of normal fees based on number of days delay, in case of LLPs, additional fees is Rs. 100/- per day of delay with no upper limit. (*from 2018 onwards, MCA has also bring Rs. 100/- per day late fees in case of delayed filing of some of the returns without any upper limit). It has also resulted in non-updation of ROC records in respect with defaulting LLPs and affected transparency also.
The Ministry has received representations from various stakeholders requesting for grant of an opportunity, hence this scheme has been brought as a part of Governments’ constant efforts to promote ease of doing business and to give defaulting LLPs a chance to make good their default by filing pending documents and to serve as a compliant LLP henceforth. This is the very first time that any such amnesty scheme has been brought in respect of the LLPs.
Now, in furtherance of Ministry’s circular no. 11/2020 dated 24.03.2020 as a relief measure to address the COVID-19 threat and in order to facilitate the Companies/LLPs registered in India to make a fresh start on a clean slate, certain changes have been made in the “LLP Settlement Scheme, 2020” vide MCA circular no. 13/2020 dated 30.03.2020.
We have summarized the “LLP Settlement Scheme, 2020” including the modifications made thereto, below hereunder:
This scheme shall enable the defaulting LLPs to complete their pending ROC compliances by filing necessary documents in MCA21 registry without being subject to additional fees on account of any delay. A ‘defaulting LLP’ means a LLP which had made any default in filing of any of the documents, statement, returns, etc. on the MCA21 registry within the due date(s).
Time Period: The time period given under modified LLP Settlement Scheme, 2020 to complete the belated filings is from 1st April, 2020 till 30th September, 2020 (both days inclusive). In original scheme, this time period was kept from 16th March, 2020 till 13th June, 2020. As per the modified scheme, any defaulting LLP is permitted to file belated documents, which were due for filing till 31st August, 2020 in accordance with the provisions of this scheme i.e. forms that are due till 31st August, 2020 to be considered for the said scheme. Earlier, this scheme was made applicable in case of the belated documents till 31st October, 2019 only.
Additional Fees: Under this scheme, no additional fees shall be charged for late filing and only normal fees for filing of documents in the MCA21 registry shall be payable. Vide circular no. 13/2020, additional fees for filing of belated forms has been waived off which was earlier kept at Rs. 10/- per day for each form maximum up to Rs. 5,000/- per form.
Returns covered under LLPSS-2020: Earlier as per the circular no. 06/2020 dated 04.03.2020, this scheme was applicable only for Form-3, Form-4, Form-8 and Form-11, however as per modifications vide circular no. 13/2020 dated 30.03.2020, this scheme has been made applicable on filing of all the documents or forms which are required to be filed in the MCA21 registry under the provisions of LLP Act, 2008. I. Form-3: Information with regard to limited liability partnership Initial 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; IV. Form-11: Annual Return of Limited Liability Partnership (LLP). V. Form-15: Notice for change of place of registered office. VI. Form-5: Notice for Change of Name. VII. Form-12: Form for intimating other address for Service of Documents. VIII. Form-22: Notice of intimation of Order of Court/ Tribunal/CLB/ Central Government to the Registrar IX. Form-31: Application for Compounding of an offence. X. Form-23: Application for direction to Limited Liability Partnership (LLP) to change its name to the Registrar. XI. Form-29: Notice of (A) alteration in the certificate of incorporation or registration; (B) alteration in names and addresses of any of the persons authorized to accept service on behalf of a foreign limited liability partnership (FLLP) (C) alteration in the principal place of business in India of FLLP (D) cessation to have a place of business in India
Grant of Immunity: The LLPSS-2020 scheme shall grant the immunity to the defaulting LLPs from launching of prosecution by the Registrar for such defaults.
Non-applicability: This scheme shall not be applicable to the LLPs that 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.
In case, we miss LLPSS-2020: Once the scheme is concluded, the Registrar shall take necessary action under the Act against the LLPs that have not availed of the scheme and are in default in respect of filing of any of the documents in a timely manner.
The Way Ahead: The LLPSS-2020 is an important initiative of the current Indian Government that aims to promote ease of doing business in India. Every defaulting LLP must avail the benefit of this golden opportunity in respect of its belated forms and come out clean of its pending filings and worries. A thorough year-wise inspection must be made to make themselves aware of any non-compliance relating to any year and the respective form in that respect must be filed within the give time.
Our Assistance: We at DNA & Co. Chartered Accountants, will be happy to help and guide on availing the maximum value out of the one-time LLPSS-2020 scheme.
Read Also: Company Fresh Start Scheme, 2020
About the Author: This article has been authored by Nitesh Goel, Managing Partner of M/s DNA & Co. Chartered Accountants who is a fellow member of the Institute of Chartered Accountants of India. He has around 10 years of experience in the field of Assurance, International Taxation, Internal Audits, Bank Audits, Internal Financial Controls, etc. with various Indian & Foreign Multinationals. He also possess specialization in audit of manufacturing sector and working in SAP & ERP environment.
Disclaimer: Absolute Care is taken to prepare this article however inadvertently if any errors occurs then the Author shall not be held responsible for any such cause. The content published is only for educational purpose and shall not be construed as rendering of any professional advice in any manner whatsoever. The readers must exercise their own judgement and refer the original source before any implementation.