Closing LLP

In case the Limited Liability Partnership (LLP) wants to close down its business or where it is not carrying on any business operations for the period of one year or more, it can make an application to the Registrar of Companies for declaring the company as defunct and removing the name of the LLP from its register of LLP’s. Generally LLP can close down its business by adopting any of the following two ways:-

  • Declaring the LLP as Defunct
  • Winding Up of LLP

Declaring the LLP as Defunct

In case the LLP wishes to close down its business or where it is not carrying on any business operations for the period of one year or more, then application to the Registrar for declaring the LLP as defunct can be made and thereby LLP name will be removed from the Records of the ROC.

E-Form 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. Similarly, Registrar also has the power to strike off any defunct LLP after satisfying himself of the need to strike off and has reasonable cause.

However, registrar will send a notice to the LLP of his intention and request to send their representation within one month from the date of the notice.

The Registrar shall publish such notice or content of the application made by the LLP on its website for a period of one month for the information of the general public. In case no reply is received within the mentioned period, registrar may strike off the name of LLP.

Winding up of LLP

Section 63, 64 and 65 of LLP Act 2008 governs the process for winding up of the LLP. It is the process where all the assets of the business are disposed off to meet the liabilities of the same and surplus any, is distributed among the owners. The LLP Act 2008 provides for following two modes for winding up the LLP.

  • 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 in the following cases:-
    • 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 penalty for LLPs defaulting in filling of any statutory returns is Rs. 100 per day, without any maximum limit. Hence, its is often best to windup dormant LLPs so that there is no requirement to file the LLP Form 8 and Income Tax Return for the LLP each financial year to maintain compliance and avoid penalty.

LLP Closure Process

Cease Business Operation
If the LLP is operational and the promoters wish to close the LLP, the LLP must first cease all commercial activity.

Close Bank Account
Before commencing the process any bank account opened in the name of the LLP must be closed and a Closure Certificate evidencing closure of the name of the LLP must be obtained From the Bank.

Affidavits & Declaration
Affidavits must be executed, that the Limited Liability Partnership ceased to carry on commercial activity from (date) or has not commenced business.

Documents Preparation
Then Necessary documents will be prepared for filing with the Registrar.

Complete Required Filings
After incorporation of LLP, the LLP agreement must be filed with the MCA within 30 days of registration. In case this compliance was missed and LLP agreements must be filed.

Obtain Statement of Accounts
A statement of accounts disclosing NIL assets and NIL Liabilities that is certified by a Practicing Chartered Accountant up to a date not earlier than thirty days of the date of filling of Form must be obtained.

File LLP Form 24
File Form LLP 24, 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.

LLP Winding Up Process

Passing resolution for winding up
Resolution must be passed where the consent of all the partners is accorded for winding up.

Solvency Declaration and Valuation Report
Filing of Declaration of Solvency along with the Statement of Assets and Liabilities and Valuation Report.

Creditors Consent
Obtaining consent of creditors, if any.

Preparation of other Documents
Filing declaration with respect to consent of creditors.

Newspaper Advertisement
Issuing Newspaper Advertisement as per the registrar guidelines.

Appointment of Liquidator
Liquidator to be appointed to further carry on the winding up process.

Liquidator report submission
Report of Liquidator to ROC and Tribunal.

Winding Order Passed
Passing of order of winding up by the Tribunal.

File Necessary Forms with ROC
Filing of Order of tribunal with the ROC by filing necessary E- Form.

Official Gazette Publication by ROC
Publishing in Official Gazette by ROC that the LLP stands dissolved.

Documents Required

PAN Card and Aadhaar Card of all the Partners.

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.

Pricing

Normal

Starting at Rs. 13,499 /- Onwards
  • Closure of LLP with no business activity since incorporation with upto 4 partners having no assets and liability.

Standard

Starting at Rs. 18,499 /- Onwards
  • Closure of LLP with no business activity since last one year with upto 5 partners and having no creditors.

Executive

Starting at Rs. 42,499 /- Onwards
  • Closure/winding up of LLP with upto 5 partners and having only one secured creditor in the LLP as on date of closure.

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Frequently Asked Questions

Can we close LLP before one year from the date of incorporation?

No, at least one year must have lapsed before closing a LLP voluntarily.

Will a liquidator be appointed while closing of LLP in India?

No, a liquidator is not required, and there is no need to make an application to Tribunal while closing an LLP in India.

Can an active LLP be closed?

You can wait for a period of one year from the date of the last transaction becoming opting for the standard LLP closure procedure. Alternatively, the LLP can be also be closed with the help of liquidator if partners do not wish to continue the business.

Can the application for LLP closure be made without filing Form 8 and Form 11 for past years?

No, all the 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 is required to be completed.

What should be done with LLP Pan Card?

You will have to make an application for the surrender of the PAN card.