News Excerpt
In order to provide relief to law-abiding companies and Limited Liability Partnerships (LLPs), the Ministry of Corporate Affairs (MCA), has introduced the “Companies Fresh Start Scheme, 2020” and revised the “LLP Settlement Scheme, 2020”.

Companies Fresh Start Scheme, 2020 (CFSS)
•    To facilitate Indian companies to make a fresh start, MCA has taken certain alleviative measures for the benefit of all companies by exercising its power under the Companies Act, 2013 and introduces the scheme “(CFSS-2020)” with effect from 1st April 2020 to 30th September 2020.
•    Companies Act 2013 mandates all companies to make statutory compliance by filing Annual Return and Financial Statements along with various other documents on MCA21 electronic registry within the prescribed time limit.
•    Under this scheme, stakeholders are granted with one-time opportunity to complete their pending compliances including annual filings without any additional fees on account of any delay. It also grants immunity for any prosecution or proceeding against the company for imposing any penalty on account of delay in filing documents.
•    The Scheme also provides an opportunity to the inactive company to convert into a dormant company under section 455 of companies act, 2013

LLP Settlement Scheme, 2020
    In March, 2020, the Ministry of Corporate Affairs (MCA) has introduced a scheme namely “LLP Settlement Scheme, 2020” for limited liability partnership (LLPs) by allowing a one-time condonation of delay in filing statutorily required documents with the Registrar of Office (ROC).
    The scheme provided a window from 16th March, 2020 to 30th September 2020to LLPs for completing overdue or delayed filings of four forms which were due for filing till 31st October, 2019. Also, the additional fee on these forms is reduced to Rs. 10 from Rs. 100 per day of delay with upper cap of Rs. 5,000 per form.

Analytica
    Due to applicability of additional fee on late filing, a large number of LLPs have remained non-compliant, mainly on account of their inability to pay late fees for the cumulative period of delay. This move is one-time opportunity for LLPs to ensure that they make necessary compliance in defaulting LLPs.
    It should be noted that the Scheme will be applicable to LLP, which is registered under the Limited Liability Partnership Act, 2008 which has made a default in filing of documents on the due date(s) specified under the LLP Act, 2008.
    The defaulting LLPs, which have filed their pending documents till 13th June 2020 shall not be subjected to prosecution by Registrars of Companies (ROC) for such defaults.
    If LLP does not file pending forms till 13th June 2020 then the additional fees would be back to Rs. 100 and it will have no upper cap.

Conclusion
The initiative will help non-compliant Limited Liability Partnership (LLP) firms turn compliant and enable ‘Ease of Doing Business’ for such entities.This scheme would provide a one-time relaxation in additional fee to the defaulting LLPs to make good their default by allowing filing of pending documents and help them serve as a compliant LLP in future.

Limited liability Partnership(LLP)
    LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
    The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
    The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
    Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
    Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

PEPPER IT WITH
Companies Act 2013, LLP ACT 2008,MCA21