Close-LLP


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|| Close LLP ||

Process to Close LLP

Voluntary Strike Off

To opt for Strike Off method of closure, LLPs must meet the following grounds of eligibility:

Not been in commercial operation for at least one year. To apply for voluntary strike off status, the LLP must file an application in Form 24 LLP and submit the same to the Registrar of LLPs.
The LLP must have made all the compliance till the date of filing for closure. However, it needs to file annual returns only until the end of the year it stopped commercial operation It must have obtained the consent of all the parties involved. Members, creditors and any or all regulatory authorities. (The domain of which the LLP lies under)
The LLP must not have any assets or liabilities on the date of preparation of financial statements.

Documents Required for the voluntary closure of LLP

Statement of Accounts - Prepared less than 30 days from date of application. It must be certified by a practicing CA.
Copy of latest Income Tax return
Certificate of bank account closure
Copy of LLP's resolution
Affidavit by which the members claim the LLP has no creditors or Liability
Indemnity Bond
Affidavit by the designated partners
Copy of detailed application
Copy of the initial limited liability partnership agreement

Compulsory closure of a Defunct LLP through Strike Off method-

The Registrar of LLPs has the power to bring about the closure of any LLP. The former can strike off a defunct LLP: if it has not carried out any business for a period of 2 years and he has enough reason to do so.

Process of closure through Compulsory Strike Off method

The Registrar will notify the members of the LLP of the same.
They will be given the opportunity to state their side of the argument.
If the LLP fails to get back to the Registrar within the stipulated time the process will be carried on.
He shall then publish the notice of the LLP's closure on its website for a period of one month.
Receiving no objections, the name will be struck off.
A notice will be published in the Official Gazette regarding the same and the LLP shall stand dissolved from the date of the notice.

Voluntary winding up

When the members of an LLP want to bring about its closure, it is known as voluntary winding up.

To initiate the closure through this method:

The LLP needs to pass a resolution. At least three fourths of the total partners must consent to it.
A replica of the resolution passes shall be filed with the Registrar. It must be done through Form 1 within 30 days of the resolutionâ€™s passing.
It should also file Form 2 which states that they do not have any debts or the debts that they do have will be made good within one year from the date of the passing of the resolution.
Within 14 days of the resolutionâ€™s passing, the LLP must advertise in a newspaper the details of its closing.
It should then appoint a liquidator for the purpose of liquidation of the assets and settlement of the liabilities.

Note: the creditors have the option to appoint a liquidator. If there isn't any liquidator appointed by both the LLP and the creditors then the Tribunal shall appoint a liquidator.

Another resolution should be passed which approves the report filed by the liquidator.
The latter shall file this report through Form 9.
The partners and the creditors of the LLP will then approve to closure.

Compulsory Winding up

The Tribunal or the Registrar can initiate the closure of an LLP. Above in the article, we discussed how the Registrar initiates the closure of a defunct LLP through Strike Off method. Here, we discuss the grounds on which the Registrar or the Tribunal closes a functioning LLP. Note that the LLP is not struck off rather it is wound up and liquidated. This is different from Strike Off method as it is much simpler.

Grounds of Compulsory LLP Winding up-

If the LLP decides to be wound up by the Tribunal
Has only one member for more than 6 months
Inability to pay debts
If it acted against the State's or the Nation's interests
Defaulted in filing the Statement of
In case the Tribunal sees it fit to wind up the LLP

The closure of business is the last resort. Though the closure of LLP is simpler than the closure of companies, only after considering every alternative should the members initiate the process to close LLP. If the members are willing to cease operations for a while or take a hiatus, it is better to obtain defunct status than file for closure. However, if the decision is certain then the members can avail the services of the companywala.

We help streamline the process of closure for our users. Reach out to us for any help on info@thecompanywala.com

Disclaimer:- The materials provided herein are solely for information purposes and shall not be treated as solicitation in any manner and for any other purpose whatsoever. It shall not be used as legal opinion and not to be used for rendering any professional advice. The material s written on the basis of the provision applicable as on date of writing of this article.