STRIKING OFF OF LLP
Effective August 5, 2024, the Ministry of Corporate Affairs (MCA) has transferred the authority to process Limited Liability Partnership (LLP) strike-off applications from the Registrar of LLPs to the Centre for Processing Accelerated Corporate Exit (C-PACE).
What is LLP Strike-Off?
Striking off an LLP refers to the removal of its name from the Register of LLPs, effectively dissolving the entity. However, dissolution does not eliminate the possibility of future claims, as the Indemnity Bond is intended to safeguard against such liabilities. This process applies when an LLP has ceased operations for at least 1 year or more and no longer intends to conduct business.
Legal Provisions for LLP Strike-Off
The strike-off process for LLPs is governed by Section 75 of the Limited Liability Partnership (LLP) Act, 2008, read with Rule 37 of the LLP Rules, 2009. These provisions have been amended to reflect the transfer of processing authority to C-PACE. LLPs can apply for voluntary strike-off under this provision.
Key Highlights Post C-PACE Implementation
1. Centralized Processing: LLP strike-off applications will now be handled exclusively by C-PACE, eliminating the need to approach individual Registrars of LLPs.
2. Standardized Application Processing: The centralized approach ensures uniform document verification and faster approvals.
3. Increased Efficiency: This procedural change aims to reduce inconsistencies and expedite strike-off approvals.
STEP-BY-STEP PROCESS FOR STRIKING OFF AN LLP
Phase 1: Pre-Requisites Before Filing a Strike-Off Application
Before filing a strike-off application, the LLP must fulfill the following conditions:
√ Cessation of Business: The LLP must have ceased its business operations and should not be engaged in any activities except for applying for strike-off.
√ No Pending Legal Matters: There should be no ongoing investigations, legal proceedings, or regulatory actions against the LLP.
√ Clearance of Liabilities: The LLP must settle all outstanding dues, including statutory liabilities.
√ Closure of Bank Accounts: The LLP’s bank accounts must be closed, and a closure certificate must be obtained from the bank.
√ Filing of All Compliance Forms: The LLP must ensure that all mandatory filings (such as Form 8 – Statement of Account & Solvency and Form 11 – Annual Return) are completed up to the date of cessation.
√ Obtain Statement of Accounts: A Statement of Accounts disclosing NIL assets and liabilities (including capital contribution) must be obtained from an independent practicing Chartered Accountant (CA). This statement should not be older than 30 days from the date of filing e-Form 24.
Phase 2: Filing the Strike-Off Application
Once the pre-requisites are met, the LLP can proceed with the strike-off application:
♦ Preparation of Required Documents: The following documents must be arranged for submission:
- Strike-Off Application (e-Form 24) available on the MCA V3 portal.
- Affidavit and Indemnity Bond from all partners.
- Certificate from a CA confirming NIL creditors (secured and unsecured).
- Statement of Accounts (not older than 30 days from the application date). (Note: The same Chartered Accountant who has provided the Statement of Accounts must affix their Digital Signature Certificate (DSC) on e-Form 24.)
- Partners’ consent along with a resolution for striking off the LLP.
- Declaration confirming no pending legal cases.
♦ Publication of Notice: The Registrar will publish a notice of the strike-off application on the MCA website, inviting any objections within one month.
♦ Final Approval & Gazette Notification: If no objections are received, C-PACE will issue a final strike-off order, removing the LLP’s name from the register of LLPs, and the same will be published in the Official Gazette and MCA website.
♦ Post-Approval Compliance: The LLP must inform relevant authorities regarding the effectiveness of the strike-off.
Important Considerations for LLP Strike-Off
Non-Eligibility for Strike-Off
Based on practical experience, the authority may reject an LLP’s strike-off application if:
- The LLP has pending prosecution, inquiry, scrutiny, or compounding cases before any regulatory authority.
- The LLP has outstanding liabilities towards government dues.
- The LLP has ongoing assessments or pending filings under the Income Tax Act, GST Act, or other applicable laws.
Recommended Optional Attachments with e-Form 24
To avoid resubmission or rejection, the following optional attachments may be included with e-Form 24:
- Strike-off application explaining the brief information about the LLP and attachments
- Certificate from a practicing CA confirming NIL creditors.
- Affidavits (in STK-4 format, as no prescribed format exists for LLPs).
- Indemnity Bond (STK-3 format, as no prescribed format exists for LLPs).
- All LLP agreements & amendments since incorporation.
- No Objection Certificate (NOC) from relevant regulatory authorities, if applicable.
- Declaration on non-applicability of audit, if required.
- Consent copies from all partners.
- Bank closure certificate & final bank statement.
- Affidavits confirming no active bank accounts.
Note: Any document if executed outside India, must be duly apostilled, consularized, and notarized.
♦ Resumption of Business Before Strike-Off Approval
If an LLP resumes business operations before final strike-off approval, it must immediately withdraw its application.
Have more questions about the LLP strike-off process under C-PACE? Drop your thoughts in the comments below, and let’s discuss the latest developments together! Need expert help? Whether it’s documentation, CA certification, or end-to-end filing, we offer comprehensive compliance solutions to ensure a smooth and hassle-free process.
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