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Closure and Winding up of LLP

CLOSURE AND WINDING UP OF LLP





    Overview

    By Declaring the LLP as Defunct or Fast Track Exit Mode

    Where the Parties to an LLP wishes to close down its business or where the LLP is not carrying on any business for a period of more than one year, they can make an application to the Registrar for declaring the LLP as defunct and removing the name of the LLP from its register of LLP’s. This can be done through filing of e-form 24.

    On the other hand, the ROC has the power to strike off any defunct LLP. In such a case, a notice will be served on LLP asking to make representation within one month from the date of service of notice. On non-receipt of reply, the ROC may strike off the name of LLP.

    LLP closure Process

    • Preparation of Statement of Accounts
    • Closure of bank accounts of the LLP
    • Hold a meeting of Designated Partners and pass resolution for closure of LLP
    • Drafting of Affidavits and Indemnity Bond
    • Filing of e-form for Closure
    • Tracking the status in MCA Website

     

    Documents Required

    • Affidavits verifying that the LLP has ceased to carry on commercial activity or has not commenced any business.
    • Letter evidencing closure of bank account.
    • No due Certificate.
    • Latest filed Income Tax Return or acknowledgement.
    • Indemnity bond declaring that the LLP has no liabilities and indemnify any liability that may arise even after striking off.
    • Consent of Designated Partners in the form of Board Resolution.
    • Statement of Assets and Liabilities.

    Winding up of LLP

    Winding up of a LLP can be done by either of the two ways explained below:

    1. Voluntary LLP closure, which is done upon the decision of Designated Partners

    Process

    • Passing resolution for winding up.
    • Filing of Declaration of Solvency along with the Statement of Assets and Liabilities and Valuation Report.
    • Obtaining consent of creditors, if any.
    • Filing declaration with respect to consent of creditors.
    • Issuing Newspaper Advertisement.
    • Appointment of Liquidator.
    • Report of Liquidator to ROC and Tribunal.
    • Passing of order of winding up by the Tribunal.
    • Filing of Order with the ROC.
    • Publishing in Official Gazette by ROC that the LLP stands dissolved

    Documents Required for LLP closure

    • Consent of Partners and Creditors
    • Declaration of Solvency
    • Statement of Assets and Liabilities
    • Valuation Report from a Registered Valuer
    • No due Certificate.
    • Letter evidencing closure of bank account.

    Compulsory winding up which is done compulsorily by the Tribunal on the following circumstances:

    • If an application has been made by the Designated Partners;
    • If the number of partners falls below 2 for a period of more than 6 months;
    • If the LLP is unable to pay its debts;
    • If the LLP has acted against the interests of the sovereignty and integrity of India, the security of the State or public order.
    • If the LLP has failed to file Statement of Account and Solvency or annual return for any 5 consecutive financial years; and
    • If the Tribunal believes that it is just and equitable to wind up the LLP.

    Process for Closure of LLP

    • The petition or an application for winding up of LLP to be filed with the tribunal.
    • The Tribunal fixes the date of hearing, issues notice to the LLP to appear and justify its position and also issues a public notice to inform everybody.
    • The Tribunal passes the Winding-up order.
    • Filing of Order with the ROC.
    • Publishing in Official Gazette by ROC that the LLP stands dissolved.

    Faq

    What all are the option to close an LLP

    A) Declaring the LLP as Defunct and B) Winding up of LLP

    What are the steps for Closure of LLP though winding up procedure?
    • Passing the resolution to close the LLP
    • Submitting Form 1
    • Declaration of debt
    • Valuing assets and submitting form 4
    • Getting consent from creditors
    • Appointing LLP liquidator
    • Dissolution on submission of form 9
    When is LLP declared as defunct?

    If the LLP company has not been operating for a one year, then it can be declared as defunct. In this case, form 24 should be filed for closure of LLP.

    How many partners should consent for voluntary LLP closure?

    At least three-fourth of the business partners should opt to close the LLP for voluntary closure.

    Who appoints the LLP liquidator?

    The partners can appoint an LLP liquidator for a fixed remuneration. The appointment of the LLP liquidator can happen only if majority of the partners approve. Else, the tribunal will appoint an LLP liquidator to facilitate closure of LLP.

    How much time does the LLP have to publish the winding up resolution?

    Once the resolution for LLP closure has been passed, an advertisement should be published in the local newspaper within 14 days.

    Within how many days after the resolution is passed should Form 1 be submitted?

    Form 1 should be submitted within 30 days of passing the resolution.

    How can Legalsyne help me with LLP closure?

    Our consultants can help you through the entire process. We can also help you prepare statement, draft affidavit, close accounts, file forms and take care of other legalities related to closure of LLP.

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      Proprietorship Registration

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