The LLP Settlement Scheme 2020 was unveiled by India’s Ministry of Corporate Affairs. The plan is designed to temporarily alleviate the requirements for paying the condonation fines for late document submission for defaulting LLPs. The LLPSS is a huge relief for the LLPs that had failed to file the LLP Agreement or the annual return for the LLP to the ROC. According to the LLP Settlement Scheme, an LLP may submit all outstanding returns to the ROC up until December 31, 2020, without incurring any further fees or penalties. The LLP Settlement Scheme 2020 provides all defaulting LLPs with a single opportunity to submit their outstanding returns, documents, etc., to ROC without paying any further fees or penalties.
To use the LLP Settlement Scheme (LLPSS), you must first conduct a thorough investigation of your LLP and compile a list of all outstanding returns to submit to the ROC. If you failed to submit the LLP agreement at the time of LLP incorporation, you might still do it using LLP Form 3. The New LLP Settlement Scheme will go into effect on April 1, 2020, and it will last through December 31, 2020. The specifics of the LLP Settlement Scheme 2020 are covered in this article.
As previously mentioned, some LLPs have continued to be non-compliant due to their failure to file the requisite returns within the prescribed due dates, which has had several negative effects. For this reason, the LLP Settlement Scheme 2020 has been made public.
ROC Records Updation : The ROC records of the LLP are usually available for examination by interested parties upon payment of the required fee, but because the LLP failed to file the required forms, the records have not been updated and are therefore, not accessible to the interested parties.
Avoid Partner’s Criminal Liability : The designated partners in charge of compliances are subject to criminal liability for the non-filing of such compliances with the ROC. This LLPSS grants immunity from such prosecution to the defaulting designated partners.
In order for the dormant LLP to Close: Fulfilling all compliances are a requirement for the LLP before it moves forward with their striking-off process. Numerous inactive LLPs cannot be struck-off because they failed to file LLP Agreement in Form 3, annual returns in Forms 11 and Financial Statements in 8 within the prescribed due date. In accordance with this scheme, the inactive LLP gets the option to file all outstanding forms and returns even after the due dates or right before applying for strike-off, if necessary.
The plan provides flexibility to many defaulting LLPs which have not filed their required compliances before their due dates.
Effective Date (April 1 to September 30, 2020) : The Revised LLP Settlement Scheme 2020 is in force as of April 1, 2020, and will accept any previously unfiled forms up until September 30, 2020. The timing and benefits of the original plan have been extended.
Application (All Pending Forms and Returns) : The Scheme is applicable to all LLP compliances which were required to be filed by August 31, 2020. For financial years 2018–19, it is possible to file Forms 11 and 8, but for the LLP Form 3 and 4, any forms that are due until August 31, 2020, can be filed under this scheme.
Complete waiver of late fees : The LLP Settlement Scheme 2020’s most significant advantage is that it completely waives any additional fees and penalties for any late filings.
Immunity from Prosecution : According to the LLP Act, the defaulting LLP and its partners are liable for criminal prosecution if they fail to file the necessary forms and returns. However, if they file all outstanding returns before September 30, 2020, they will be granted immunity from prosecution with regard to any paperwork they file as part of this plan.
The following forms are included in the LLPSS-2020’s coverage:
The MCA has made it clear that the LLPSS-2020 will not apply to LLPs that have submitted Form 24 to the ROC in order to have their name struck-off from the register of Companies and LLPs in accordance with the LLP Act, 2008 and rules established thereunder.
The MCA has further emphasized that after LLPSS-2020 expires, the ROC will take necessary actions under the LLP Act, 2008 against the LLPs which have not not their compliances under the scheme and are still in default for timely filings.
In response to the COVID-19 epidemic, the Indian government launched LLPSS-2020, a significant project that intends to enhance the ease of doing business in India by easing the compliance burden for many defaulting LLPs and giving them the chance to start again as fully compliant companies.