So, if they are incorporated, lawfully they are also supposed to be closed, though reason may vary from LLP to LLP.
A Limited Liability Partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, some or all partners have a form of limited liability similar to that of the shareholders of a corporation. Unlike corporate shareholders, the partners have the right to manage the business directly. Lets us discuss its concept, closure and related provisions in depth.
What law/ regulations/statues govern Limited Liability Partnership (LLP)?
The Limited Liability Partnership Act 2008 was published in the official Gazette of India on 9 January 2009 and has been in effect since 31 March 2009. Accordingly, same Act governs the closure of LLP also.
What is Limited Liability Partnership (LLP)?
As per Limited Liability Partnership Act, 2008, a Limited Liability Partnership means an partnership formed and registered under this Act.
What are different ways in which a LLP can be closed?
Any LLP can close down its business by adopting any of the following two ways:
A) Declaring the LLP as Defunct
In case the 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 for declaring the LLP as defunct and removing the name of the LLP from its register of LLP’s.
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, in this case, registrar has to 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.
B) 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 i.e.:
I) Voluntary winding up
II) 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,—
What is the process to close a Limited Liability Partnership (LLP) as defunct?
This is the most easy and simple way to close a Limited Liability Partnership (LLP) but there are situations: –
LLP is inoperative from the date of incorporation or inactive for a period of at least one year and
The Process starts as follows: –
If the above conditions do not fulfil in that case LLP has to opt for Voluntary Winding Up.
What are compliances to be done by Limited Liability Partnership (LLP) to for closure?
Following conditions should be fulfilled by Limited Liability Partnership (LLP):-
Note:- ROC will reject the closure of LLP if any of due of any department like Income Tax return and ROC compliances are pending.
What are forms required to incorporate a Limited Liability Partnership (LLP) as defunct?
For closing a Limited Liability Partnership (LLP) by declaring as defunct LLP, filing of E-form – 24 is required.
What are documents required to close a Limited Liability Partnership (LLP) as defunct?
The following documents are required: –
What are post follow-up for Limited Liability Partnership (LLP) once applied for closure?
Once, the E-form 24 id filled by Limited Liability Partnership (LLP) to Registrar. The Limited Liability Partnership (LLP) has to wait for approval from ROC if all documents attached in form are ok. Afterwards, publish the name of LLP in official gazette that this named LLP is going to be defunct by ROC for any objection by public, whatsoever.
If no objection is received, ROC after waiting for a while will close a Limited Liability Partnership (LLP) and remove the name of Limited Liability Partnership (LLP) from its register.
Disclaimer: The above article is prepared keeping in mind all the important and basic question relating to closure of Limited Liability Partnership (LLP) that by declaring as defunct. The author has tried to cover all the important and basic question. Under no circumstance, the author shall not liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.
(My name is Tripti Shakya, Practicing Company Secretary at M/s Tripti Shakya and Company, and is Corporate Consultant and provides varied array of services including Start-ups mentor, Secretarial, Legal, Trademark, taxation, Audit, GST, Book keeping and other ancillary advisory service in Delhi, Chandigarh as well as The National Capital Region (NCR) and can contact me through email id:- [email protected] and Contact Number: 91-8178515005)