The Limited Liability Partnership (LLP) as an alternative business vehicle. That offers the advantages of Limited Liability but gives its members the freedom to organize their internal structure. As a partnership based on a mutually negotiated agreement. The LLP is often the chosen choice for small businesses due to its versatility in its structure and service.
Developments by Central Government
It came to the Government’s attention that a large number of LLPs failed to file the Form (3) viz. LLP Contract and amendments thereto and legislative return viz. Form-8- Account & Solvency Statement (Annual or Interim) and Form-Tl- Annual LLP Return.
LLPs which presently file such documents upon payment of an additional fee of one hundred rupees for each day of such delay under Section 69 of the LLP Act in the event of the require forms not being file within the specify period , in addition to any fee payable for the filing of such document or return.
Many representations for waiver of fees or forgiveness of delay and relaxation of additional fees on the grounds of undue financial burden were obtained from different quarters.
A significant number of LLPs did not file their due statutory documents with the Registrar in a timely manner. Form 3 shall be filed for the filing of details relating to the LLP Agreement and amendments, if any, and Form-4 shall be filed for the filing of the Notice of Appointment of the Partner / Designated Partner, his approval, etc. to be filed at the specified charge.
As a result, the documents available in the electronic archive are not updated and are not available for review by the stakeholders. In addition, the LLPs and their assigned partners are responsible for criminal proceedings due to the failure to file the necessary paperwork on time and the said LLPs will not be closed until all enforcement is done.
As part of the ongoing government efforts to encourage ease of doing business, it was agree to grant the defaulting LLPs a one-time relaxation in additional fees to correct their default by filing pending documents and to serve as a compliant LLP in the future.
The government also took certain special measures under the Companies Act 2013 and LLP Act 2008 in view of COVID-19.
LLP Settlement Scheme, 2020
The Central Government introduced a scheme namely “LLP Settlement Scheme, 2020”, by allowing a One-time condonation of delay in filing statutorily required documents with the Registrar.
The details of the scheme are as under:
“(i.) This scheme shall come into force on the 16th March, 2020 and shall remain in force up to 13th June, 2020.
(ii.) Definitions: In this scheme, unless the context otherwise requires, – (a) “Act” means the Limited Liability Partnership Act, 2008; (b) “LLP” means a LLP as defined in Section 2 (n) of the Limited Liability Partnership Act, 2008; (c) “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;
(iii.) Applicability: –
Any “defaulting LLP” is permit to file belated documents, which were due for filing till 31st October, 2019. In accordance with the provisions of this Scheme:
(iv) Manner of payment of fees and additional fee on filing belate document for seeking immunity under the Scheme – The defaulting LLPs may themselves avail of the scheme for filing documents which have not file or register in time on payment of additional fee Rs 101 – per day for delay in addition to any fee as is payable for filing of such document or return, provide that such payment of additional fee shall not exceed Rs. 5,0001 – per document.
(vi) Immunity from prosecution in respect of document(s) file under the scheme. The defaulting LLPs, which have file their pending documents till 13th June 2020 and made good the default. Shall not subject to prosecution by Registrar for such defaults.
(vii.) Scheme not to apply to certain documents
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.
This issues with the approval of the competent authority.”