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 LLPs.
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.
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.:
1. Voluntary Winding up
2. 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.
Conditions for filing an application for closing a Limited Liability Partnership Following are the conditions to file an application for closure of LLP:
- LLP should be inoperative from the date of Incorporation or period of at least one year.
- Consent of all its partners should be taken
- LLP should not have any assets or liabilities as per the date of application.
- ‘E-form 24 LLP is to be filed with ROC, to indicate that the LLP has no debts or it is in position to pay all debts within a specific period.
Following are the documents that need to be attached with E-form 24:
- Copy of the undertaking /indemnity bond for striking off name Indemnity bond.
- An affidavit signed by the designated partners.
- Copy of authority to make the application duly signed by all the partners.
- Copy of acknowledgment of latest ITR.
- Consent of all the partners.
- Consent of creditors is also needed.
- Statements of accounts disclosing nil assets and nil liabilities certified by a Chartered Accountant in practice made up to a date not earlier than 30 days of the date of filing.
- Application disclosing the reasons for strike off and operative status of the company.
- File LLP Form 24 for strike off: LLP form 24 can be filled with the MCA to strike off name of LLP. On processing the application, if found applicable, the concerned registrar of companies would cause a notice to be published on the MCA website announcing striking off of the LLP.
On receipt of Certificate of striking off of the LLP, an Authorised person should surrender the PAN and TAN of the Limited Liability Partnership.
Important Points to note:
- All dues returns in form 8 and Form 11 up to the end of the financial year in which the LLP ceased to carry on its business or commercial operations must be filed before filing LLP Form 24.
- Any dues towards statutory authorities must be close; Income tax return must be filed.
- 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.
- 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 filing of Form must be obtained.
Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.
Author- CS Aakansha Negi and can be contacted at [email protected]