Wednesday, August 23, 2023

MCA Circular on LLP Condonation of Delay _ Key Points and FAQs

 Introduction: Facilitating Seamless Compliance

The Institute of Company Secretaries of India (ICSI) has been tirelessly working to bridge the gap between Regulatory Authorities and stakeholders. In this endeavor, ICSI presented the challenges faced by stakeholders in adhering to the prescribed timelines for filing e-forms under the LLP Act, 2008 and its rules to the Ministry of Corporate Affairs. Recognizing the significance of these issues, the Ministry responded positively and introduced a scheme for Condonation of Delay, allowing LLPs to rectify their defaults. Let's delve into the details of this circular and understand the FAQS associated with it.

The Ministry's Positive Move

The Ministry of Corporate Affairs extended its support by rolling out a scheme for Condonation of Delay in filing Form-3, Form-4, and Form-11 under Section 67 of the LLP Act, 2008. This scheme aims to offer immunity from prosecution for belated filing, easing the burden on stakeholders and promoting good governance.

Key FAQS on Condonation of Delay

  1. Processing Changes for Form-3 and Form-4

    • Form 3: Conditional Straight Through Process (STP) form.
      • Straight Through Process mode for initial agreement.
      • Non-STP mode for change in business activity.
    • Form 4: Conditional STP mode.
      • STP for independent filing.
      • Non-STP for filing with change in business activity.
  2. Processing Type Beyond 30.11.2023

    • The change in processing type continues beyond November 30, 2023.
  3. Period Covered by the Circular

    • The circular covers Form 3, Form 4, and Form 11 filed between September 1, 2023, and November 30, 2023.
  4. Additional Fee Waiver/Reduction

    • Form 3, Form 4, and Form 11 filed between September 1, 2023, and November 30, 2023, enjoy reduced additional fees based on event dates and type of LLP.
  5. Normal Fee During the Scheme Period

    • The normal fee structure applies from September 1, 2023, to November 30, 2023.
  6. Additional Fee Beyond November 30, 2023

    • After November 30, 2023, the existing fee structure applies without any relaxation.
  7. Editing Fields in Excel Files for Form 11

    • All prefilled fields in the Excel file can be edited. Rows and columns can be added/deleted.
  8. Enhancements in Form 11

    • Several enhancements, including prepopulation of data and allowance for multiple roles, have been introduced.
  9. Filing Form-3 with Same Event Date

    • Yes, Form 3 can be filed with the same event date to correct master data for 'Change in agreement.'
  10. Sequence for Filing Form-3

    • Form-3 LLP should be filed sequentially based on event dates/agreement dates.
  11. Correcting Prefilled Master Data in Change of Agreement

    • Stakeholders can delete incorrect records and add new ones with accurate details.
  12. Correction of Prefilled Master Data in Initial Agreement

    • Reach out to MCA helpdesk or file the initial agreement and later correct it with Form-3 for change in agreement.
  13. Sequential Filing for Form-4

    • Form-4 LLP should be filed sequentially based on event dates/agreement dates for both linked and independent filing.
  14. Sequential Filing for Form-11

    • Form-11 LLP should be filed sequentially based on Financial Year end date.
  15. Enhancements in Form-3 During Relaxation Period

    • During the relaxation period, Form-3 allows appointing/cessating the same partner with the same event date in one form only.

Conclusion: Strengthening Good Governance

The Ministry's introduction of the Condonation of Delay scheme reflects its commitment to supporting stakeholders and fostering a culture of compliance. These FAQs elucidate the key points of the circular, ensuring that stakeholders can navigate the process with clarity and confidence. The Institute's upcoming webinar will provide further insights into this essential topic, helping stakeholders make the most of this opportunity to reinforce good governance practices.