“Explore the process of Voluntary Strike off for Limited Liability Partnerships (LLPs). Understand the advantages, reasons, and step-by-step guide for a smooth closure. Discover the prerequisites, compliance, and aftermath of filing Form-24. Benefit from a quick and compliance-free route to dissolve an inactive LLP, avoiding fines and liabilities.”
INTRODUCTION
Limited Liability Partnership (LLP) is a distinctive form of partnership wherein partners can enjoy the benefits of limited liability. Unlike traditional partnership firms, LLPs offer a perfect blend of limited liability of a company and the flexibility of a partnership. This unique business structure allows the existence of the LLP to continue even if there are changes in partners, ensuring stability and continuity.
One of the key advantages of an LLP is that it can enter into contracts and hold property in its name, just like any other legal entity. This feature provides LLPs with increased credibility and recognition in the business world. Additionally, being a separate legal entity, the LLP shields its partners from joint liability, protecting them from the actions of other partners.
The liability of the partners in an LLP is restricted to the agreed contribution they have made to the LLP. This safeguard ensures that personal assets are not at risk due to any debts or obligations of the LLP. Each partner’s financial exposure is limited to their investment, providing peace of mind and security to the stakeholders.
Another essential aspect of LLPs is their voluntary striking off process. Should an LLP decide to cease its operations, it can undertake a Voluntary Striking Off by submitting an application in E-Form 24 to the Registrar. The consent of all partners is required for this process, enabling a smooth and transparent closure of the LLP.
An LLP which is not carrying on any Business or operations (date of cessation of commercial operations) for a period of 1 YEAR OR MORE, may apply to Registrar of Companies (ROC) for voluntarily striking off the name of LLP from the Registrar of Companies (ROC).
The Application for strike off of Companies is made in FORM – 24REASONS FOR STRIKE OFF
1. No compliance burden: Once the name has been removed from the register of LLP, the Director and Promoter get free from the compliance responsibility.
2. Speedy Route of Closure: Inactive or non – functioning LLP can be closed by submitting FORM – 24 to the Registrar of LLP.
3. Avoid Fines: If the inactive LLP is not following legal compliances, it may incur hefty penalties and fines, punishments for the officers of the LLP in some instances, including debarment of the Directors from starting another LLP. Hence, it is better to officially wind- Up an LLP that is inactive and avoid potential fines or liabilities in the future.
PROCESS FOR MAKING APPLICATION OF VOLUNTARY STRIKE OFF
| SL. No. | PARTICULAR | |
| 1) | Call and hold Meeting of partners for making application of strike off in Form -24 | PRE-REQUISITES BEFORE FIILING FORM – 24 |
| 2) | Obtain the consent of ALL the members of the LLP for proposed Strike off | |
| 3) | File overdue returns of LLP regarding: | |
| a) Statement of Account & Solvency: Form – 8 | ||
| b) Annual Return of LLP: Form – 11 | ||
| Both forms shall be up to the end of the last operational Financial Year. | ||
| 4) | Obtain approval of regulatory authority (if applicable) | |
| 5) | File Form – 24 along with enclosed attachments |
AFTERMATH OF FILING FORM -24
| SL. No. | PARTICULARS |
| 1) | The MCA will proceed the publish notice of closure for general dissemination for one (1) month** |
| 2) | After the expiry of time specified in MCA’s notice and if no objections are received, the name of LLP will get struck off |
| 3) | The LLP will stand DISSOLVED from the date of such publication in the official gazette |
** Explanation.
–In computing the period of 1 month from the date of order, the requisite time for obtaining a certified copy of order shall be excluded.
*** DATE OF CESSATION OF COMMERCIAL OPERATION
It is date from which the LLP ceases to carry its revenue generating Business and the transactions such as receipt of money from debtors or payment of money to creditors, subsequent to such cessation will not form part of revenue generating business.
DOCUMENT CHECKLIST
| SL. No. | NAME OF THE DOCUMENT |
| 1. | Statement of Accounts disclosing Nil Assets & Liabilities |
| 2. | Affidavit for all partners |
| 3. | Acknowledgment of the latest Income-tax return. |
| 4. | Initial limited liability partnership agreement and any subsequent LLP Agreement (if entered) |
| 5. | Application for Strike Off to ROC |
| 6. | CTC for authority of partner/(s) to file Form -24 |
| 7. | Consent of Creditors (if any) |
| 8. | Consent letter of all partners for strike off |
| 9. | Proof of Bank confirmation w.r.t closure of Bank Account |
| 10. | NOC from applicable Regulatory Authority |
| 11. | Indemnity Bond for all partners |
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