LLP Settlement Scheme 2020 for defaulting LLPs

A Limited Liability Partnership (LLP) is a business arrangement whereby the liability of the partners is limited. The Limited Liability Partnership (LLP) business vehicle is a legal entity having its existence independent from its partners where their rights and duties are determined in terms of the agreement between them, owing to such flexibility in nature small enterprises preferred the Limited Liability Partnership.

But a large number of LLPs are not filing their statutory documents with the registrar in a timely manner due to which LLPs and their designated partners are liable for criminal prosecution and huge financial burden also imposed on them in the form of an additional fee and the LLPs cannot be closed till all compliances are completed.

To overcome difficulty, the Government circulated the LLP Settlement scheme 2020,  as a part of ease of doing business to give a Onetime relaxation in additional fees to the defaulting Limited Liability Partnerships to make good their default by filing pending documents and to serve as a complaint Limited Liability Partnership in future.

What is LLP Settlement scheme 2020

The defaulting Limited Liability Partnership (which has made default in filing of documents in due dates specified under Limited Liability Partnership Act,2008) can file the documents which were due for filing till 31st October 2019 on payment of additional fees of Rs. 10/-per day instead of Rs. 100/- per day provided that such payment of additional fees shall not exceed Rs. 5000/- per documents.

Following documents can be filed under the LLP scheme:

• Form-3 Filing of LLP Agreement and changes thereon
• Form-4 Notice of appointment, cessation, change in name/ address/ designation of designated partners and consent to become partner/designated partner
• Form-8 Statement of Account & Solvency
• Form-11 Annual return of LLP

The scheme shall not apply on:

Limited Liability Partnerships which has made an application in form 24 to the registrar for striking off its name from the register.

Timeline:

The enforcement date of the scheme is 16^th March 2020 and shall remain in force up to 13^th June 2020.