Corporate Compliance
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Services we provide under Corporate Compliance
- Limited Liability Partnership
- CFSS
What are Annual Filings? (Overview)
Limited liability partnerships (LLPs) are required to meet fewer criteria for compliance on filing annual returns, in comparison to private limited companies. LLPs are required to provide information related to the statement of accounts, and returns, on an annual basis. Penalties, however, are huge for failure to comply. Entities that don’t provide the requisite information are fined heavily, with penalties that can go up to Rs. 5 lakhs.
What Are The Benefits of Filing Annual Compliances For LLPs
- Higher Credibility:Annual compliance provides for higher credibility to the organization for loan approvals or any other similar requirements.
- Record of Financial Worth:Annual compliance filings by LLP’s provide records to other companies regarding their financial worth, which may result in new and interested investors.
- Stays Active and No Penalties:With regular filings, LLPs are not declared as defunct, and stays active. Also, annual compliance filings are mandatory and hence involve penalties (additional fees) to LLPs, when they default on filings.
- Conversion or Closure:Regular annual compliance filings facilitate easier conversion of Limited Liability Partnerships into other types of companies, as well as quicker resolutions in case of dissolution of partnerships.
What are the Checklist items for Filing of Annual Compliance?
- Annual returns need to be filed with the Registrar of Companies.
- Annual returns to be filed as per the prescribed format of LLP Form 11.
- This is required to be filed within 60 days from the close of the financial year, or the 30th of May of each year.
- The LLP annual compliance has to be met by each and every registered LLP even if there is no business activity. In fact, it has to be met even if the LLP has been closed down and whether or not a business bank account exists.
What Are The Important Requirements of Filing Annual Compliance?
Maintain Discipline
For businesses to meet their annual compliance requirements, all it requires is for them to remain disciplined and vigilant. However, being callous can result in hefty fines and penalties. No to mention, LLPs that meet annual compliance requirements are often granted loans quicker or readily funded by investors, as these businesses are compliant with the requirements of the Registrar of Companies (RoC).
Regular Updates From The RoC (Registrar Of Companies)
With an on-call company secretary throughout the year, you can ensure that your business is run in accordance with the laws in force. Our team would keep you up-to-date on all the changes made by the RoC, throughout the year.
What are the Documents Required Filing of Annual Compliance?
Form 8 lip
You must file the Form 8 inside 30 days from the completion of 6 months after a financial year ends. Two designated partners can sign this form digitally. Also, a company secretary/chartered accountant/cost accountant must certify the same. There are 2 parts in a Form 8 –
- Part A – The solvency statement
- Part B – Statement of expenditure & income, statement of accounts.
For not filing the Form 8 on time, a penalty of Rs 100 per day will be imposed.
Form 11 lip
This form contains details such as the total number of designated partners, details of partners along with details of body corporates as partners, contributions received by the partners and summary of all partners. All LLPs must file the Form 11 within 60 days after the end of the financial year, along with the fee prescribed. Therefore, the LLPs should file their Form 11 by 30th May every year.
An LLP will not be allowed to close or wind up till it files all its annual returns. Therefore, all LLPs must file their annual returns on time, to avoid penalties.
Government Announces Relief Measures for Defaulter Companies
Now no worries for your long-standing compliance dues.
You now have a well-deserved breather, thanks to the recent compliance incentives initiated by the Government.
Want to know more? Here we go!
2 Schemes for law-abiding companies and LLPs
In a major relief to the businesses largely disrupted by the ‘claws’ of the Covid-19 pandemic, the Government has announced certain welcome measures. The Ministry of Corporate Affairs (MCA) has launched Fresh Start Scheme 2020 and revised LLP Settlement Scheme 2020 to help law-abiding companies and LLPs. These schemes offer an opportunity for these companies to make a fresh start and clear their compliance defaults. This is an initiative from the MCA to incentivize compliance and reduce the compliance burden of companies. Both these schemes can be availed during the moratorium period from 1st April to 30th September 2020.
We will discuss these 2 schemes in details-
A) Companies Fresh Start Scheme 2020 (CFSS)
Government announces waiver of additional fee (including penalty) of up to Rs 107800 for 1 year and exempted forms are ADT-1, AOC-4, MGT-7, KYC and 22A
Government announces waiver of additional fee (including penalty) of up to Rs 136900 for 2 years and exempted forms are ADT-1, AOC-4 – 1st year, AOC-4 – 2nd year, MGT-7 1st Year, MGT-7 – 2nd year, KYC and 22A
Let’s see the other provisions of this scheme –
For defaulting companies-
- They will need to pay only the normal fees for all statutory filings (in respect of any return, statement, document and so on) needed for complying with the MCA 21 registry. Any additional fee, whatsoever, has been waived off
- Immunity has been provided against proceedings and prosecution arising due to delayed filing only
- In case of an existing appeal by the company against any such proceedings and prosecution or any related order and notice thereof, the company must withdraw the aforesaid appeal, before registering under this scheme.
- In case the company has not filed an appeal (on the commencement of the scheme) against any such court order related to the delayed filing, it will be given 120 days to do so. No further action will be initiated against it during this period.
- Upon filing the CFSS-2020 form, the company will be given immunity up to 6 months after the date of closure of the scheme.
- The designated authority will issue the Immunity Certificate in this regard
- The company does not need to pay any fee with this form.
For inactive companies
- They may apply for this scheme to file due documents
- They need to apply for dormant status by filing e-Form MSC-1, along with the fee prescribed
- The time period to file the e-Form ACTIVE has been extended till 30th September. The filing fee of Rs 10,000 has been waived off.
B) Revised LLP Settlement Scheme 2020
The provisions mentioned in this scheme are as follows-
- This scheme is to benefit defaulting LLPs for whom filing of belated documents ( Form 3, Form 4, Form 8 and Form 11) is due till 31st August 2020
- They will need to pay only the normal application fees for such filings. Any additional fee, whatsoever, has been waived off
- No proceedings and prosecution will be initiated by the Registrar against these LLPs if they complete the filing by 30th September 2020
- LLPs who have applied for striking off their names from the Registrar will not be considered for this scheme.
- Upon the conclusion of this scheme, the Registrar will be free to take necessary actions against the defaulting LLPs who have not availed this scheme.
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