At the outset, we all are aware that this is a turbulent time for the entire globe as everyone is suffering from coronavirus pandemic. Hence we pray for you, your family and friends to be healthy, happy and safe in this severe situation.
As we know that the LLPs (Limited Liability Partnerships) forms a very important part of the MSME sector which is crucial for the growth of our nation. The LLP is an innovative model introduced for the first time in India in the year 2008 to provide flexibility to entrepreneurs to operate as a traditional partnership at the same time providing the benefits of a corporate form which is already tried and tested by some advanced countries like UK, USA, etc.
THE COMPLIANCE REQUIREMENT FOR THIS INNOVATIVE MODEL ARE NOT HUGE BUT SHOULD BE ADHERED WITHIN TIMELINES
As opposite to companies LLPs are not burdened with too many compliances but often due to negligence despite having active businesses, partners of LLPs still fails to file the statutory returns with Registrar of Companies (ROC) and hence are liable to strict legal action.
In light of the above we wish to apprise the readers that recently the Ministry of Corporate Affairs (MCA) which regulates the functioning of the corporate sector in India had vide it's General Circular No -06/2020 dated March 04, 2020 launched a one-time settlement scheme for the LLPs popularly known as "LLP settlement scheme 2020" to grant one-time immunity from heavy fee and prosecution against the defaulting LLPs.
Modus Operandi of Scheme- With a view to allow LLPs to file their belated returns the MCA has launched this scheme to be effective from March 16, 2020 to June 13, 2020 in which the defaulting LLPs can file their belated returns by paying statutory filling fee along with an additional fees of Rs 10 per day for delay subject to maximum additional fee of Rs 5000 per document.
Immunity from Prosecution- The LLPs who avail benefit under this scheme will also be granted immunity from any prosecution by ROC.
Applicability of scheme- This scheme is applicable only for Form -3, Form 4, Form 8 and Form 11 under LLP Act. The defaulting LLPs are permitted to file belated documents which were due for filling till October 31, 2019 in accordance with provisions of this scheme.
The scheme shall not apply to LLPs which has made an application in form 24 for striking off its name.
CONCLUSION: The central government with a view to promote ease of doing business has accorded this one time opportunity to the LLPs operating throughout the country. Those who have defaulted in filing their returns can avail of this scheme so as to immune themselves from huge monetary loss and also from prosecution.
Therefore this is the time where we are already witnessing a slowdown due to corona virus impact but we can certainly protect ourselves from loosing our hard earned money in penalties and unwanted legal tussle further.
WE WISH YOU TO TAKE CARE OF YOUR HEALTH AND WEALTH FROM BOTH NATURAL AND MAN MADE DISASTERS
Recently, further the MCA has issued one more General Circular no-11/2020 dated March 24, 2020 containing some special measures to reduce compliance burden under Companies Act, 2013 and LLP Act, 2008, in view of COVID-19 outbreak. Let's see what impact will it makes?
Links for MCA circulars
- LLP Settlement Scheme 2020- http://www.mca.gov.in/Ministry/pdf/GeneralCircular06_04032020.pdf
- Special Measures for Companies and LLPs- http://www.mca.gov.in/Ministry/pdf/Circular_25032020.pdf
This article is co-authored by Mr. Abhay Kumar Chandalia (Chartered Accountant and Company Secretary) who is founder and director of M/s Share Samadhan Private Limited india’s largest unclaimed investment recovery advisory and Mr. Himanshu Goyal who is a practicing company secretary dealing with matters related to corporate laws.
Disclaimer-Absolute care is taken to prepare this article however inadvertently if any error occurs then the authors shall not be held responsible for any such cause. The content published is only for educational purpose and shall not be construed as rendering of any professional advice in any manner whatsoever. The readers must exercise their own Judgement and refer the original source before any implementation. In no event shall the authors be liable for any direct, indirect, special or incidental damage resulting or arising out of or in connection with use of information. Further, the content is an original work of the authors and may be used only after prior written permission.