The LLP (Limited Liability Partnership) that has not carried out any business plan since its incorporation or has ceased to carry out the profession for a period of one year or more can petition for its closure, which includes a request for the LLP's name to be struck off by the ROC. Every LLP can shut down its operations in one of the two ways listed below:-
- Declaring Limited Liability Partnership as Defunct-If an LLP wishes to end its business or is not carrying on any business operations for a period of one year or longer, it can file a request with the Registrar to have the entity-LLP declared defunct and the name of the LLP removed from the register of LLPs in India.
Per clause (b) of sub-rule 1 of Rule-37 of the LLP, Rules 2008, the e-Form 24 must be filed in order to strike-off the title of the LLP. Similarly, the Registrar has the authority to stamp off whatever deceased LLP if he is satisfied that the need for strike-off is justified.
Again, for general public's knowledge, the Registrar shall post such notice/content of the petition on its website created by the LLP for a period of one month. If no response is received inside the specified time, the Registration can strike off the name of the LLP.
- Winding Up of LLP-The process for winding up an LLP in India is governed by Sections 63, 64, and 65 of the LLP Act 2008. It is the process by which all of a company's assets are auctioned off to satisfy its liabilities, with any excess being distributed even amongst the shareholders. The LLP Act of 2008 specifies two options for winding up a limited liability partnership (LLP), namely, liquidation and dissolution.
- Voluntary Winding Up-The members can decide to stop and wind up the LLP's operations if they agree.
- Compulsory Winding Up-A LLP may be forced to dissolve by the Tribunal,—
- If the LLP determines that now the limited liability partnership should be ended up by the Tribunal;- If the LLP's number of partners is decreased to less than two for more than six months;
- If the Limited Liability Partnership (LLP) has been unable to pay its debts;
- If the LLP has engaged in a way that jeopardizes India's sovereignty and integrity, state safety, or public order.
IMPORTANT DOCUMENTS FOR CLOSING LLP
- Address Proof of firm have to be submitted. Also, NOC from landlord will be submitted. (If the registered office place is rented, rent agreement & one utility bill (water bill, electricity bill, property tax bill, gas receipt etc.)
- A statement of account revealing NIL assets & NIL liabilities, made up to a date not earlier than thirty days of the date of filing of Form 24 certified by a Chartered Accountant in practice.
- Copy of acknowledgement of latest ITR- Self Explanatory
- Copy of the initial LLP agreement, along with changes thereof if entered into and not filed,
- An affidavit signed by the designated partners of LLP, either jointly/severally, to the effect: -
- That the Limited Liability Partnership has not commenced business or where it commenced business, it ceased to carry on such business from …………. (dd/mm/yyyy);
- That the limited liability partnership has no liabilities and indemnifying any liability that may arise even after striking off its name from the Register;
- That the Limited Liability Partnership has not opened any Bank Account and where it had opened, the said bank account has since been closed together with certificate(s) or statement from the respective bank demonstrating closure of Bank Account;
- That the LLP has not filed any Income-tax return where it has not carried on any business since its incorporation, if applicable.
- NOC from Creditors: - NOC for strike-off to be obtained from secured creditors & Partners, if any
- Copy of Detailed Application- Mention full details of LLP plus reasons for closure
- Copy of Authority to Make the Application- Duly signed by all the PartnersIndemnity Bond: -
- The application in the Form as may be prescribed must be accompanied with an Indemnity Bond given by each designated partner of applicant LLP separately, duly notarized to the effect that should there be any liabilities on the LLP, such liabilities will be met in full by the designated partners of the applicant LLP even after the name of the LLP is struck off the register of the companies and will be liable jointly as well as severally.
- 2. Indemnity Bond is required to be given on the Non-Judicial Stamp Paper of adequate value as applicable in the State where the Registered Office of the LLP is situated. Therefore, the text of the Indemnity Bond should be typed on the Non-Judicial Stamp Paper and then should be executed before the Public Notary.