Exploring LLP Closure with Compliance Precision
Seamlessly navigate LLP closure with our compliance expertise. Whether through striking off, voluntary or compulsory winding up, ensure a smooth transition backed by the Limited Liability Partnership Act, 2008 regulations.
Overview
In India, LLP closure procedure refers to the striking off of the name of a defunct LLP with no business activities for the past year. For this process, the LLP must possess neither assets nor liabilities. Designated partners must settle any remaining accounts by selling assets and clearing liabilities. If the LLP has no assets or liabilities and faces no objections from the public, the Registrar will proceed to close the LLP. Now get to know more about the same here.
Legal Provisions for Closing of LLP in India
According to Rule 37 of the Limited Liability Rules, 2009, if a Limited Liability Partnership (LLP) is inactive for one year or more, it can apply to the Registrar, with unanimous consent from all partners, to have its name removed from the register.
Reasons to Close and LLP
LLPs must be closed in accordance with the LLP Act where the designated partner is subject to significant penalties and prosecution if the LLP’s due returns are not filed on time. Here are few reasons to close an LLP:
- The costs of keeping an LLP are higher than the costs of dissolving it.
- To avoid fines and penalties for late filing.
- The LLP is either unable to pay its bills or is on the verge of bankruptcy. For any five consecutive financial years, the limited liability partnership fails to file its annual returns.
- The LLP is incompatible with India’s integrity and sovereignty, security of state and public order.
Conditions
- LLP has been inactive for at least one year or has been inactive since its formation.
- As of the date of application, LLP has no assets or liabilities and its current account has been closed.
- LLP obtain the parties’ consent, including any other authorities, creditors and partners.
- Form 24 should be filled with ROC indicating no debts of the company and its ability to pay debts.
Documents required
| S. No. | Documents |
| 1 | Consent of all partners |
| 2 | Consent of all creditors |
| 3 | LLP agreement and modified agreements, if any. |
| 4 | Statement of company accounts |
| 5 | Declaration and affidavits |
| 6 | Copy of authority to make the application duly signed by all partners |
| 7 | Copy of acknowledgment of latest Income-tax return |
| 8 | Form 8 – Statement of Account Solvency and Charges |
| 9 | Form 11 – Annual Return of LLP |
| 10 | Copy of order / NoC of the concerned regulatory authority |
What is included in this
FAQs
Strike off of LLP is the process of removing a Limited Liability Partnership (LLP) from the register of LLPs maintained by the Registrar of Companies (ROC). It can be done either voluntary or mandatory.
An LLP agreement is an agreement between two or more people who have decided to operate a business jointly. The agreement outlines the guidelines for operating the firm, including how revenues and losses will be allocated, how decisions will be made and how disagreements will be settled.
The partners submit a declaration of solvency stating that the LLP has no debts or if there are debts, then they will be able to pay all of its debts within one year of the date of dissolution.
Depending on the conditions, the procedure to strike off an LLP can take anywhere from 20 to 30 working days. Some of the elements that could affect how long it takes to terminate an LLP include the following:
- The period required to complete the application by the Registrar of Companies.
- Whether or not the LLP has any unpaid liabilities or debts.
- Whether or not creditors or other interested parties have any objections to the strike off.
E form 24 is required to file application to ROC for strike off of LLP.
ROC has power to issue notice under section 75 of LLP Act 2008 read with Rule 37 of LLP Rules, 2009 informing that unless a cause to the contrary is shown within specified time period, name of LLP shall be struck off from the Registers of ROC.
Form 24 is a crucial document for closing a Limited Liability Partnership (LLP) in India. The applicant is required to submit it to the Registrar of Companies (RoC).
No, an LLP cannot be closed without filing Form 8, which declares the statement of solvency.
If you want your LLP to remain on the register, you must reply promptly to any formal inquiry from the registrar and deliver any outstanding documents. Failure to deliver the necessary documents may also result in the members being prosecuted.
