Closure of LLP

Overview

In case the Limited Liability Partnership (LLP) needs to close down its business or where it is inoperative from the date of incorporation OR inactive for a period of at least one year, then it can make an application to the Registrar of Companies for declaring the LLP as defunct and removing the name of the LLP from the register of LLP’s.

Modes of Winding Up of LLP

There are two modes of winding up of LLP as per LLP Act, 2008 i.e.

• Voluntary Winding up: Under this mode partners of LLP can decide amongst themselves to windup the LLP through Passing resolution and filing the copy of resolution with registrar.
• Compulsory Winding up: A limited liability partnership may be compulsorily wound up by the Tribunal if any of the following condition satisfies:
  ◦ The LLP decides to be wound up by the Tribunal.
  ◦ Number of partners of the LLP is reduced below 2 for a period of more than 6 months.
  ◦ The LLP is unable to pay its debts.
  ◦ The LLP has acted against the interests of the sovereignty and integrity of India, the security of the State or public order.
  ◦ The LLP has made a default in filing with the Registrar the Statement of Account and Solvency or annual return for any 5 consecutive financial years.
  ◦ The Tribunal is of the opinion that it is just and equitable that the LLP be wound up.

Procedure

• STEP 1 - Filing of application to ROC : An application is required to be made in Form-24 to the concerned Registrar for striking off the name of LLP with consent of all partners and along with the following documents:
  i. Copy of detailed application.
  ii. Copy of authority to make the application.
  iii. Copy of consent of all partners.
  iv. Approvals or NOC from concerned Regulatory Authorities with which the LLP is registered. Copy of the undertaking/ indemnity bond for striking off name.
  v. Copy of statement of assets and liabilities duly certified as true and correct by auditor/chartered accountant in practice (Mandatory).
  vi. Copy of acknowledgement of latest Income tax return (Mandatory)
  vii. Evidence letter for closure of the bank account in the name of the LLP must be obtained from the Bank.
  viii. Indemnity Bonds to indemnify any person legally claiming when the LLP to be strike off and duly sworn Affidavits declaring all the data provided and statements given to be true, from all partners.
  ix. Any other information can be provided as an optional attachment
• STEP 2 - Publication of Notice :: The Registrar shall publish a notice on the website for a period of one month for the notice of the general public.
• STEP 3 - Strike off :: On the expiry of period of one month, the Registrar may, by an order, unless cause to the contrary is shown by the limited liability partnership, strike its name off the register, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the limited liability partnership shall stand dissolved.

Conditions for Filing Form 24

• The LLP which has ceased its commercial activities for the period of 1 year or more or which has never commenced business activity can only file form 24.
• Before filing this form LLP is required to close Bank Account of LLP if any and letter of closure of account should be obtained from the Bank.
• Consent of all the partners and creditors of LLP should be obtained.
• Affidavit by the partners of LLP that the LLP is not carrying on any commercial activities for the period of 1 year or more or it has never commenced business operations.
• Any pending returns in Form 8 and Form 11 up to the end of the financial year in which the limited liability partnership ceased to carry on its business or commercial operations must be filed before filing LLP Form 24.

Document Required for Closure of LLP

Following are the documents required for Closure of LLP:

• PAN card of LLP
• LLP Agreement
• Latest Income Tax Return acknowledgement(if any)
• Closure of bank current Account Statement / Certificate
• Latest Statement of Accounts of LLP
• PAN & Adhar card of Partners
• Latest Address Proof of all Partners
• DSC of the Designated Partner.