LLP Settlement Scheme, 2020 -  A boon for Defaulting LLPs

The Limited Liability Partnership (LLP) is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. Since it contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’, the LLP has become the preferred option for small enterprises. Every LLP must ensure filing of prescribed statutory documents with the Registrar on yearly basis as well as for event based filings.

However, a large number of registered LLPs are not filing their due statutory documents in a timely manner with the Registrar of Companies. In the event of requisite forms not being filed within prescribed time limit, presently LLPs have to pay an additional fee of Rs.100/- for every day of delay in addition to the normal fees payable, therefore amounting to a huge financial burden on the defaulting LLPs. Further, LLPs and their designated partners are liable for criminal prosecution and the said LLPs cannot be closed till all compliances are completed.

To promote ease of doing business and to give one-time relaxation in additional fees to the defaulting LLPs, the Central Government has introduced a scheme namely “LLP Settlement Scheme 2020” vide General Circular No.06/2020 dated 04^th March 2020 which was subsequently modified vide General Circular No.13/2020 dated 30^th March 2020. The Scheme allows a one-time condonation to the LLPs for delay in filing statutory documents with the Registrar of Companies. The features of this Scheme are explained below: