Closing a Limited Liability Partnership (LLP) involves various legal and procedural steps to ensure compliance and a smooth transition. This checklist outlines the preconditions, required documentation, and the step-by-step process for the closure of an LLP, whether through voluntary or compulsory winding up.
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What Is Closure of LLP?
Limited Liability Partnership refers to close which means to remove its name from the register & no business activity for the past year. Also, LLP has no assets or liability then the registrar will proceed to the closure of LLP. Under rule – 37 of LLR OF 2009 deals with the striking off the name of defunct LLP.
Types of LLP Closure
- Voluntary winding up: All partner mutually decide to close the LLP
- Compulsory winding up: It is done by the Registrar of Companies there are some conditions :
- There is reduction in no. of partners two or more than two continuously from 6 months or more in LLP
- Partner applied for closure of LLP through tribunal
- If they have not paid loans/ debts
- If they have work against law
- Under form 8 & 11 they did not file the annual return from the last 5 years.
Pre-Conditions Before Closure of LLP
- LLP shall file overdue returns in Form 8 and Form 11 up to the end of the financial year in which it ceased to carry on its business or commercial operations before filing Form 24
- LLP shall file Income Tax return upto the year in which it carries on business or commercial activities
- LLP shall ensure that there is no business or commercial transactions in preceding 1 year; All assets and liability should be paid before making an application
- Close all its bank accounts before filing application;
- It ensure that the Agreement has been filled with the REGISTRAR OF COMPANIES
Documentation for Closure of LLP
- SOA(Statement of account)
- It should not be older than 30 days.
- It should be certified by CA.
- In SOA, assets or liability should not be pending.
- Bank closure certificate
- Copy of last income tax return
- Copy of PAN
- Partners ( Identity & address proof)
- Indeminity bond ( It should be notorised & witnessed)
- Notorised affidavit of all partners
- Declaration for loans & deposit which should not be pending
- No pending court case
- Authority letter( In this, all partners authorize one partner who take care of LLP closure in legal proceedings)
Process for Closure of LLP
It is small processes which can only be proceeding in online form by filing form – 24 to the registrar of companies:
STEP 1: Firstly, you have to pass a designated partner resolution for the closure of LLP.
STEP 2: All partners will give consent for the closure of LLP
STEP 3: CLOSE BANK ACCOUNTS: For filing form – 24 the bank account should be closed which is open at the name of LLP and a letter evidence of closure must be obtained from the bank
STEP 3: PREPARE AFFIDAVIT & DECLARATION: All partners can jointly or separately complete an affidavit that the LLP ceased to carry on commercial activity from the date or has not commenced business at all.
Also, LLP partner should declare that there is no liability of LLP even after the strike of the name from the register or closure of LLP after using form – 24
STEP 4: SUBMIT DOCUMENTS: ITR of LLP or LLP deed must be enclosed & a copy of acknowledgement should be attached with the application but in case, if LLP not filled ITR or business activity. Then, no need
STEP 5: FILE PENDING DOCUMENTS: If LLP agreement not filed with the MCA in 30 days of registration then it should be submit with any subsequent amendments also, any overdue returns in form 8 & 11 up to the end of financial year in which LLP ceased its business must be filed with form -24.LLP discontinued its revenue generating activities from the date of cessation & any transactions after the date which does not contribute to revenue generating business.
STEP 6: CERTIFY BY CA: After the document ready as per the form – 24, a statement of account which indicates that there is no assets or liabilities and certify by CA with 30 days from the date of form- 24.
STEP 7: FILE FORM 24: Now you can download form – 24 filed with MCA to request the striking off of LLP name. If the application is approved then the ROC will publish a notice on the MCA website for announcing the strike-off of LLP.
Reasons for Shutdown/Closure of LLP
- If there is no profit
- If there is no business activity
- If there is dispute between partners
- If one partner is bankrupt
- If one partner is dead.
Conclusion: Closing an LLP demands meticulous attention to legal and procedural requirements. By following this checklist, LLP partners can navigate the closure process efficiently, ensuring compliance with regulatory obligations and a seamless transition out of business operations when necessary.
Feel free to contact the author for further clarification at 8279255794 or via mail at cspiyush94@gmail.com
Author Bio
Thanks for info. One things to be asked for closer of LLP is it on year or two years require for NO BUSINESS for LLP. further if i want to claose LLP on 31/03/2024 with in how much days i have to file form 24 with supporting documents. Main hurdle is BANK certificate for closing of account