Company LawCompany LawLatest

LLP Settlement Scheme, 2020- MCA

corporate social responsibility


The Central Government in exercise of its powers under Section 460 of the Companies Act, 2013 has decided to introduce a scheme called “LLP Settlement Scheme, 2020” to provide a one time condonation of delay in filing statutorily required documents with the Registrar.

Ministry of Corporate Affairs (MCA) vide General Circular No – 6/2020 dated 4th March, 2020 came up with this scheme after receiving representation from various quarters for waiver of fee or condonation of delay and relaxations in additional fee on the ground of excessive financial burden.

Meaning of LLP

  • LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
  • The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
  • The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
  • Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
  • Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.
  • Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

Need for the Scheme:

It has come to the notice of Government that a large number of LLPs have defaulted in filing the following forms:

  1. Form (3) viz. LLP Agreement and changes therein and statutory return,
  2. Form-8- Statement of Account & Solvency (Annual or Interim) and
  3. 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 under Section 69 of the LLP Act in addition to any fee as is payable for filing of such document or return.

Due to 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 completed.

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.

Applicability of the Scheme

The Scheme shall come into force on the 16th March, 2020 and shall remain in force up to 13th June, 2020

What is Defaulting LLP

“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;

For which period, defaulting LLP can file belated documents?

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

Which Forms can be submitted belatedly under this Scheme?

Following forms can be submitted belatedly under this Scheme:

  1. Form-3- Information with regard to limited liability partnership agreement and changes, if any, made therein;
  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).

On which LLPs this scheme is not applicable?

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.

What is the manner of payment of fees and additional fee on filing belated document for seeking immunity under this 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, provided that such payment of additional fee shall not exceed Rs. 5,000 per document

Whether cap of Rs. 5,000/- on additional fee is for all forms in aggregate or individually?

Cap on additional fee of Rs 5,000 is applicable per document and not in aggregate. Thus, if there is there is delay of 900 days, then additional fee for the form at the rate of Rs. 10 per day works out to Rs. 9,000 which is more than Rs. 5,000 and therefore additional fee will be Rs. 5,000 for the form.

Is there any immunity from prosecution in respect of document(s) filed under the scheme?

Yes, 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

To download the scheme,LLP Settlement Scheme, 2020

Related posts

16/2018-Central Tax ,dt. 23-03-2018 – Seeks to prescribe the due dates for filing FORM GSTR-3B for the months of April to June, 2018

Team Taxcharcha

CBDT extends timeline to update UDIN till 31st May 2022

Team Taxcharcha

GST Update – Rationalisation of late fee for GSTR-9 and Amnesty to GSTR-9 non-filers

Team Taxcharcha