LLP Settlement Scheme 2020

LLP Settlement Scheme : The concept of LLP has been introduced in India an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP structure is available in countries like the United Kingdom, the United States of America, various Gulf countries, Australia and Singapore. On the advice of experts who have studied LLP legislations in various countries, the LLP Act is broadly based on UK LLP Act 2000 and Singapore LLP Act 2005. Both these Acts allow the creation of LLPs in a body corporate form i.e. as a separate legal entity, separate from its partners/members.

LLP is required to file:

  • LLP Form 8 (Statement of Account & Solvency) within 30 days from the end of six months of the financial year to which it relates
  • LLP Form 11 (Annual Return) annually, within 60 days of the close of the financial year failing which the defaulting LLP’s shall be subject to prosecution by ROC and delay filing would cost Rs.100/- per day till the date of filing.
  • LLP Form 3 (LLP Agreement and changed therein)
  • LLP Form-4 Notice of appointment, cessation, change in name/ address/ designation of designated partner/ partner

However, most of the LLPs have failed to file the above forms periodically with the Ministry of Corporate Affairs due to various reasons such as inadvertence, ignorance of the law, technical errors, not being aware of the consequences, non-hiring of a proper professional to guide regarding the compliances and due dates of which most of them are unintentional. As a number of representations were received from various stakeholders to waive the fees as delay filing would cost Rs.100/- per day till the date of filing, it would be financially burdensome for small business owners. Hence in order to provide an opportunity to all the defaulting LLPs, and to avoid prosecution the government has come up with LLP SETTLEMENT SCHEME – 2020. Accordingly, Numbro team has prepared FAQ’s for better understanding, and LLP’s are advised to regularize their filings and best avail the opportunity. This document has been prepared by the secretarial department of Numbro and the authors can be reached at consult@numbro.in for further queries.

FAQ’S REGARDING OPTING OF LLP SETTLEMENT SCHEME- 2020

Applicability of LLP SETTLEMENT SCHEME- 2020

LLP’s due for filing the forms till 31st October 2019

Forms covered under the LLP SETTLEMENT SCHEME 2020

Form- 3 – LLP agreement and change 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 – viz, Statement of Accounts and Solvency

Form-11– viz, Annual returns of LLP

Purpose for which scheme is introduced.

To provide the relaxation for the LLP’s in paying the additional fees of Rs.100/- per day.

Non-Applicability

LLP’s which have made application for closure of LLP in form 24 shall not be eligible to opt this scheme.

duration of the LLP Settlement Scheme 2020 scheme

Effective from 16th march 2020 to 13th June 2020.

Fees to be paid during the LLP Settlement Scheme 2020

Rs.10 per day instead of Rs. 100/- per day up to filing of documents by the company and the maximum additional fees is rupees Rs. 5000/-.

Advantages of LLP Settlement Scheme 2020

Earlier the LLP’s which have failed to file form-3, form-4, form-8 and form
11 were required to pay additional fees of 100 per day up to the filing of the forms, which has now reduced the additional fees to 10 per day under this scheme, as a result huge amount of additional fees will be reduced.
Maximum amount of additional fees will be 5000 or amount such amount whichever is higher.
The LLP’s which filed their pending forms till 13th June, 2020 will not be enquired by the registrar for late filing of such forms.
Relief from prosecution
Up-to-date Compliances by LLP

Disadvantages of not opting the LLP Settlement Scheme

LLP’s which are not filing the documents since years have to bear huge additional fees
LLP’s Can be prosecuted for the default

Required Documents for LLP Settlement Scheme 2020

Accounting records and statement of Accounts for all the pending years of filing.

Disclaimer:

The content provided is for better understanding and knowledge sharing only. Users are advised to refer relevant applicable laws and to take professional advice before acting on this document.



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