The process closure of llp in india
Any closure of llp in india can done by adopting anyone of the following ways : Declaring the LLP is Defunct, Winding up of LLP. eForm 24 is required to be filed for striking off the name of LLP under clause (b) of sub rule 1 of Rule 37 of LLP Rules 2008.
Declaring the closure of llp in india
Declaring the Firm is Defunct – Filing LLP Form 24
The following procedure can be followed for closing a LLP by filing Form 24:
Step 1: Cease Commercial Activity
LLP Form 24 can be filed only by LLPs that never commenced business or have ceased commercial activity. Hence, if the LLP is operational and the promoters wish to close the LLP, the LLP must first cease all commercial activity.
Step 2: Close Bank Account(s)
LLP Form 24 can be filed only by those LLP that have no creditors and no open bank account. Hence, prior to filing LLP Form 24, any bank account opened in the name of the LLP must be closed and a letter evidencing closure of the bank account in the name of the LLP must be obtained from the Bank.
Step 3: Prepare Affidavits & Declaration
All the Designated Partners of the LLP must first execute an affidavit, either jointly or severally, that the Limited Liability Partnership ceased to carry on commercial activity from (Date) or has not commenced business.
Further, the LLP Partners must also declare that the LLP has no liabilities and indemnify any liability that may arise even after striking off its name from the Register. The liability of the Partners would not be extinguished even after closure of a LLP while using Form LLP 24.
Step 4: Prepare Documents
Along with Form LLP 24 the income tax return of the LLP and LLP deed must be enclosed. In case the LLP has not filed any income tax return and it has not carried on any business activity, then it is not required. Else, a copy of the acknowledgement of the latest Income-tax return filed must be attached with the application for closing the LLP.
Step 5: File Any Pending Documents
After incorporation of a LLP, the LLP agreement must be filed with the MCA within 30 days of registration. In case this compliance was missed and LLP agreement was not filed, then the initial LLP agreement, if entered into and not filed, along with any amendments must be filed.
Also, any overdue 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. The date of cessation of commercial operation is the date from which the Limited Liability Partnership ceased to carry on its revenue generating business and the transactions such as receipt of money from debtors or payment of money to creditors, subsequent to such cessation will not form part of revenue generating business.
Step 6: Obtain Chartered Accountant Certificate
Once all the documents for filing of LLP Form 24 is prepared, a statement of accounts disclosing NIL assets and NIL liabilities, that is certified by a practising Chartered Accountant up to a date not earlier than 30 days of the date of filing of Form 24 must be obtained.
Step 7: File LLP Form 24
The above mentioned documents along with LLP Form 24 can be then filed with the MCA to strike off name of LLP. On processing the application, if found acceptable, the concerned Registrar of Companies would cause a notice to be published on the MCA website announcing the striking off of the LLP.
Ways of closure of llp in india
The LLP Act 2008 provides for following two modes for winding up the LLP i.e.
- Voluntary winding up
- Compulsory winding up
Voluntary Winding Up: Under this, the partners may between themselves decide to stop and wound up the operations of the LLP.
Compulsory Winding Up: A limited liability partnership may be compulsorily wound up by the Tribunal.
- if the limited liability partnership decides that limited liability partnership be wound up by the Tribunal
- if, for a period of more than six months, the number of partners of the limited liability partnership is reduced below two
- if the limited liability partnership is unable to pay its debts
- if the limited liability partnership has acted against the interests of the sovereignty and integrity of India, the security of the State or public order
- if the limited liability partnership has made a default in filing with the Registrar the Statement of Account and Solvency or annual return for any five consecutive financial years or
- if the Tribunal is of the opinion that it is just and equitable that the limited liability partnership be wound up.
The Ministry of Corporate Affairs has recently amended Limited Liability Partnership Rules, 2009 by introducing the Limited Liability Partnership (Amendment) Rules, 2017 with effect from 20th May, 2017. With this amendment, LLP Form 24 has been introduced by the MCA and it is now possible to easily close a LLP by making an application to the Registrar for striking off name of LLP. In this article, we look at LLP Form 24 and the procedure for striking off name of LLP in detail.
Close A LLP Package
Close a LLP
File Any Pending Documents
Obtain Chartered Accountant Certificate
File LLP Form 24