LLP Settlement Scheme, 2020
Limited Liability partnerships (“LLP”) are one of the most favored forms of businesses amongst the professionals and entrepreneurs these days due to advantages in terms of recognition by the department, controlled ownership, and less complicated compliance requirements. LLPs are also favored due to the allowance in the investment under different sectors and reduced government fees for different kinds of compliances.
Such business registrations are approved by the concerned state Registrar of Companies (“ROC”) for which application can be made attaching required documents and filling information with regard to proposed partners, nature of the activity and the place of business in prescribed forms.
About the LLP Settlement Scheme
Taking into consideration the non-compliances by the LLPs for certain events and for regularization and promoting good corporate governance practices the Ministry of Corporate Affairs has come up with the following initiative-
- Applicability of Section 460 of the Companies Act, 2013 on the LLPs vide Section 67 of Limited Liability Partnership Act, 2008.
- Initiation of LLP Settlement Scheme, 2020, by allowing a One-time condonation of delay in filing statutorily required documents with the Registrar, this scheme shall initially be open from March, 16, and shall remain in operation for 90 days period. During the said time period the LLPs can ensure completion of pending compliance.
Late fee structure
Under the proposed Settlement Scheme, the late fee shall be Rs. 10/- day subject to a maximum of Rs. 5000/- for Form 8 and Form 11 per form
Whereas as per the statute, Rs. 100/- day as the late fee shall be leviable with no maximum limit for Form 8 and Form 11 per form
Technically the maximum penalty for form 8 and 11 can, in that case, be only Rs 5,000/- per form per year.
What compliance can be condoned?
The following compliances can be condoned by the ministry under proposed LLP Settlement Scheme, 2020
Form 8 – This form discloses the details relating to Accounts and Solvency with the registrar, which need to be filed within 30 days from the six months of the closure of the relevant financial year.
Form 11 – This form discloses the details of partners of such LLP along with their contributions in such an Annual Return to be filed with the ROC on or before 30th May after the closure of relevant Financial Year.
Form 4 – This form discloses the Notice of appointment, cessation, change in name/address of the designated partner. Such form shall be filed with the registrar within 30 days of such change.
Form 3 – This form is applicable in case of a change in details as filed in LLP Agreement, in case of existing LLP or the initial LLP Agreement, in case of New LLP. Such form shall be filed with the Registrar within 30 days, as the case may be.
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