Presentation on llp settlement scheme, 2020
- 1. PRESENTATION ON LLP SETTLEMENT SCHEME, 2020 Ministry of Corporate Affairs Corporate Law Vertical Asija & Associates LLP E-Mail : corporatelaws@asija.in
- 2. Coverage…. Introduction Modification in the Scheme What is the Scheme? Initial Scheme vs. Modified Scheme Benefits under LLP Settlement Scheme Conclusion
- 3. INTRODUCTION The Ministry of Corporate Affairs notified “LLP Settlement Scheme, 2020” vide General Circular No. 6/2020 dated 04th march, 2020 in light of the following concerns:- 1. Innumerous LLPs were found to have been defaulting in filing of :- - Particulars of Initial LLP Agreement and subsequent changes therein. - Annual Filings i.e., filing of Annual Return and Statement of Accounts & Solvency. 2. Filing of the delayed documents and returns were attracting heavy additional fee which was Rs. 100/- per day of default for each document / return. 3. MCA was in receipt of innumerous representations from various quarters for waiver of fee or condonation of delay and relaxations in additional fee on the ground of excessive financial burden. 4. 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. Corporate Law Vertical | Asija & Associates LLP | corporatelaws@asija.in
- 4. MODIFICATION IN THE SCHEME With the outspread of Corona Virus (COVID-19) throughout the country the Central Government came up with a notification called “Special Measures under Companies Act, 2013 (CA-2013) and Limited Liability Partnership Act, 2008” on date 24th March, 2020. MCA’s Special Measures stated that no additional fees shall be charged from LLPs for late filing during a moratorium period from 1st April, 2020 to 30th September, 2020, in respect of any document, return, statement etc. irrespective of its due date. In line with Special Measures, a notification for modification in the LLP Settlement Scheme was issued by MCA on 30th March, 2020. The “Modified Scheme” re-designed the original “LLP Settlement Scheme” and expanded the compliance relief for defaulting LLPs. The original scheme was notified for period starting from 16th March, 2020 to 13th June, 2020. The Modified Scheme concluded the original scheme on 31st March, 2020, and fresh scheme came into play w.e.f. 1st April, 2020 up to 30th September, 2020. Corporate Law Vertical | Asija & Associates LLP | corporatelaws@asija.in
- 5. WHAT IS LLP SETTLEMENT SCHEME? Duration of Scheme: This scheme shall come into force on the 01st April, 2020 and shall remain in force up to 30th September, 2020. Applicability of the 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. “Defaulting LLP" means an 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. Corporate Law Vertical | Asija & Associates LLP | corporatelaws@asija.in
- 6. Continued… 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 normal fee as applicable as per its contribution i.e., without levy of any additional fee. Immunity from prosecution in respect of document(s) filed under the scheme: The defaulting LLPs, which have filed their pending documents till 30th September 2020 and made good the default, shall not be subjected to prosecution by Registrar for such defaults. Scheme not to apply to: 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. Corporate Law Vertical | Asija & Associates LLP | corporatelaws@asija.in
- 7. INITIAL LLP SETTLEMENT SCHEME VS. MODIFIED LLP SETTLEMENT SCHEME Corporate Law Vertical | Asija & Associates LLP | corporatelaws@asija.in BASIS INITIAL SCHEME MODIFIED SCHEME REMARK AS TO MODIFICATION Tenure 16th March, 2020 to 13th June, 2020 1st April, 2020 to 30th September, 2020 Favorable Applicability of Scheme Defaulting LLP is permitted to file belated documents, which were due for filing till 31st October, 2019 Defaulting LLP is permitted to file belated documents, which were due for filing till 31st August, 2020 Favorable Payment of fees & additional fee Permitted documents or return were allowed for filing on payment of normal fee along with an additional fee of Rs 10 per day with a ceiling of amount up to Rs.5,000/- per document. Pending documents or return shall be filed by payment of normal fee as applicable as per its contribution i.e., without levy of any additional fee. Favorable Permitted Forms Only filing of Form 3, Form 4, Form 8 and Form 11 were allowed. Any pending form may be filed under modified scheme Favorable
- 8. BENEFITS UNDER LLP SETTLEMENT SCHEME The Defaulting LLPs may file their pending Annual returns, Statement of accounts & solvency, Particulars of initial LLP Agreement and subsequent changes and other pending documents with MCA on payment of Normal Fee. LLPs have an opportunity to save heavy compliance cost on account of pending ones. On making the compliance good, the LLPs can save it self and its designated partners from penalties and prosecutions under the law. The active LLPs can remain immune from “Striking off the name of LLP from Register of name of LLPs with Concerned Registrars. Defaulting LLPs may attain better corporate governance. Corporate Law Vertical | Asija & Associates LLP | corporatelaws@asija.in
- 9. CONCLUSION Corporate Law Vertical | Asija & Associates LLP | corporatelaws@asija.in Amid COVID-19 outbreak the Ministry of Corporate Affairs left no stone unturned to tackle the economic disruptions caused by it and help the Companies and LLPs to reduce their compliance burden and enjoy certain relaxations. The Government recently came up with a notification of Modification to existing “LLP Settlement Scheme” to empower the defaulting LLPs to fight against ill-effects of COVID-19 outbreak as part of it measure towards promotion of Ease of doing business. It is a golden opportunities for LLPs to make the compliance good and meet up to the expectations of regulator and public at large. 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.
- 10. DISCLAIMER This presentation has been prepared by our firm to provide insight of the “LLP Settlement Scheme, 2020”. For detailed insight and for better understanding of the various provisions of the said law, our team shall be available to provide our professional consultancy in this respect, if required by your office. Neither our firm nor any partner or employee or article of our firm shall be responsible for any decision taken on the basis of the said presentation and without obtaining our professional guidance or consultation on the matter for which reliance was made on this presentation. Corporate Law Vertical | Asija & Associates LLP | corporatelaws@asija.in
- 11. For any Further Queries & Clarification Contact CS. Manish Mishra Director Corporate Law Vertical manish.mishra@asija.in Corporate Law Vertical Asija & Associates LLP corporatelaws@asija.in