In the wake of the COVID-19 and in order to combat the situation created amidst such threat, the Government of India, Ministry of Corporate Affairs (MCA) vide its General Circular No. 6/2020 dated March 4, 2020 had announced the "LLP Settlement Scheme, 2020" (the "Original Scheme") whereby MCA allowed a "one-time condonation of delay in filing statutorily required documents with the Registrar", including forms for LLP agreement and forms for filing statutory returns by LLP's. The Original Scheme has provided a one-time relaxation in payment of additional fees to the defaulting LLPs to make good their default by filing pending documents and to serve as a compliant LLP in future.
Thereafter, to further provide for relaxations to LLP's and to assist, support and enable LLPs to focus on taking necessary measures to address the Covid-19 threat and to reduce their compliance burden, the MCA has, vide its General Circular No. 13/2020 dated March 30, 2020 ("Modified Scheme"), brought about certain modifications to the Original Scheme by inserting Para 8A to the Original Scheme titled as 'the details of the modified scheme...'. The Original Scheme and the Modified Scheme shall hereinafter collectively be referred to in this article as the "LLP Scheme".
The Original Scheme is applicable from March 16, 2020 to June 13, 2020.
All defaulting LLP's which were due for filing till 31st October, 2019 shall avail benefits of the LLP Scheme by paying a statutory filing fees (as prescribed under the Limited Liability Partnership Act, 2008) alongwith an additional fee of Rs.10 (Rupees ten only) per day for delay upto an amount of Rs.5,000 (Rupees five thousand only) per belated document.
The Original Scheme is only applicable to filing of the following forms:
- Form 3 (Information with regard to LLP agreement and changes made therein, if any);
- 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 (Statement of Account & Solvency) (Annual or Interim) and
- Form 11 (Annual Return of LLP).
The Modified Scheme:
The Modified Scheme will be applicable from April 1, 2020 to September 30, 2020, thereby extending the scope of the LLP Scheme till September 30, 2020.
All defaulting LLP's which will be due for filing till 31st August, 2020 shall avail benefits of the LLP Scheme by paying a statutory filing fees (as prescribed under the Limited Liability Partnership Act, 2008) per such belated document. No additional fees shall be payable by the defaulting LLP's for filing of any belated documents under the Modified Scheme.
The Modified Scheme is applicable to all documents or forms which are required to be filed in the MCA-21 registry under the provisions of the LLP Act, 2008 and the rules made thereunder.
Both the Original Scheme and the Modified Scheme do not apply to a LLP which has made an application in Form 24 to the Registrar for striking off its name from the register as per the provisions of Rule 37(1) of the LLP Rules, 2009.
Further, any LLP availing the benefits of the LLP Scheme and make good the defaults shall get immunity against prosecution by the Registrar for such defaults. Though, such immunity is only with respect of prosecution for non-filing of belated documents with MCA-21 and not with violating of any substantive provision of law, for instance prosecution under the taxation laws of India.
To sum it up, the LLP Scheme comes as a welcome relaxation to LLP's since the lockdown announced by the government due to COVID-19 threat, all body corporates, including LLP's have been facing difficulties not only at the operational levels but even at the basic administration levels. The LLP Scheme helps unburden the defaulting LLP's from bearing the enormous amount of additional fees that would be due from them in case the LLP Scheme would not come into force.
On the downside, the Modified Scheme has more relaxations and benefits and its scope also includes all forms in contrary to the Original Scheme which has additional fees involved and is limited to only a few forms. Also there are discrepancies and overlapping of applicability of time periods of the schemes since the time period from April 1, 2020 to June 13, 2020, both the schemes will be applicable. Therefore, the defaulting LLP's shall prefer taking benefits of the Modified Scheme rather than the Original Scheme during this overlapping time period and therefore, some clarifications may be required by the MCA whereby they clearly distinguish as to which scheme will be applicable for which during this overlapping time period.
It is appraisable how the Government of India alongwith the Ministry of Corporate Affairs (MCA), the Stock Exchange Board of India and the Income Tax Department, is providing relaxations and extensions in relation to compliances to be otherwise compulsorily adhered to, by corporate entities, and this can be seen through the announcements of various schemes including the Companies Fresh Start Scheme, 2020 which was issued by MCA on the same date when the Modified Scheme were announced. The population of our country being gigantic thereby there being numerous LLPs and in view of almost the entire country under the lockdown such a move was imperative. By virtue of this Scheme and other relaxations/extensions issued by the government, instead of focussing on the compliances the corporate bodies can utilise the said resources towards making payments to their employees.
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