Limited Liability Partnership Closure/Strike Off/Winding Up
In the case of voluntary winding up, partners may decide between themselves to wind up the business operations. In compulsory winding up, an LLP may be compulsorily wound up by order of the tribunal. There are certain circumstances for the LLP mandatory winding up. E.g. when LLP is unable to pay off its debts, the number of partners of the limited liability partnership is reduced below two, and it continues for more than six months.
Did not commence your business or no business at all now? Get your LLP Name removed from the MCA database with TAXAJ.
It usually takes 7 to 10 working days.
- Company Name removal from MCA database
- File Form 24 with MCA with prescribed attachments
- Certify statement of accounts by CA (Statement should not be older than 30 days from the date of application)
- Public Notice issued by ROC for name removal
- Excludes preparation of financial reports and annual ROC returns of company till its operations (if any)
- Excludes company & tax audit
- Excludes DIR-3 KYC of Directors and Digital Signature of Directors
- LLP with no operations
- LLP without any third party transactions
- LLP with no employees
- LLP with no registration under GST, VAT and other tax departments
- Purchase of Plan
- Expert Assigned
- Preparation of name removal Documents
- Filing with ROC
Name, Contact Number and Email Id of all the Stakeholders.
Directors Identification Number, if already.
Self Attested PAN, Aadhar & Passport size photo of all the Stakeholders.
PAN, TAN, COI, Share Certificates of the LLP.
NOC from commercial departments
Letter of account closure from bank
Previous Year's Audited Financials & Tax Reports
LLP Form 24 – Easily Close a LLP
An LLP is required to file certain mandatory returns whether it does the business or not. Non- filing of due returns will attract penalties and prosecution under the LLP Act, and the designated partners are liable to face the same action. Cessation of operation cannot be a reason for non-filing returns; an LLP continues to exist until its formal closure. An LLP being a separate legal entity registered under the law, it is mandatory to be closed as stipulated under the LLP Act. An LLP fulfilling the following conditions can apply for striking off its name from the Register of LLP.
- LLP should be inoperative from the date of incorporation OR inactive for at least one year
- LLP should not have any assets/liabilities as of the date of application.
A defunct LLP can apply to the Registrar with the partner's consent for striking off its name from the register. The application for striking off the LLP's name should be submitted with a fee, partners consent, affidavits and indemnity by all designated partners, a copy of the latest Income Tax return copy and the latest Account statement certified by a Chartered Accountant. A defunct LLP refers to an LLP that has never started a business or is not carrying any business for the immediate past one year and has no assets and liabilities.
The Ministry of Corporate Affairs has recently amended Limited Liability Partnership Rules, 2009 by introducing the LLP (Amendment) Rules, 2017, with effect from 20th May 2017. LLP Form 24 has been introduced by the MCA, and it is now possible to quickly close an LLP by making an application to the Registrar for striking off the name of LLP. In this article, we look at LLP Form 24 and the procedure for striking off the name of LLP in detail.
Winding Up a LLP
The penalty for LLPs defaulting in filing any statutory return is Rs.100 per day, without any maximum limit. Hence, it is often best to windup dormant LLPs so that there is no requirement to file LLP Form 11, LLP Form 8 and Income Tax Return for the LLP each financial year to maintain compliance and avoid penalty.
Before introducing the Limited Liability Partnership (Amendment) Rules, 2017, the procedure for winding up an LLP used to belong and was cumbersome. However, with the introduction of LLP Form 24, the process has been made straightforward. Hence, its best for Entrepreneurs having dormant or defaulting LLPs that are accruing penalties to use this opportunity to close the LLP.
Filing LLP Form 24
The following procedure can be followed for closing a LLP by filing Form 24:
Step 1: Cease Commercial Activity
LLP Form 24 can be filed only by LLPs that never commenced business or have ceased commercial activity. Hence, if the LLP is operational and the promoters wish to close the LLP, the LLP must first stop all commercial activity.
Step 3: Prepare Affidavits & Declaration
Designated Partners must execute an affidavit that the L.L.P. ceased to carry on a commercial activity or any business from (Date) or has not commenced business. Moreover, the L.L.P. Partners must also declare that the L.L.P. has no liabilities and indemnify any liability of whatsoever means that may arise after striking off. The liability of the Partners would be standing as it is even after the closure of an L.L.P. while using Form L.L.P. 24.
Step 5: File any pending Documents
After incorporating an LLP, the LLP agreement must be filed with the MCA within 30 days of registration. If you fail and the LLP agreement was not filed, then the initial LLP agreement must be filed along with any amendments if entered into and not filed. You must file any overdue returns in Form 8 and 11 up to the end of the financial year. The limited liability partnership ceased to carry on its business or commercial operations must be filed before filing LLP Form 24. The cessation of commercial operation is when the Limited Liability Partnership ceased to carry on its revenue-generating business. After such cessation, the transactions such as receipt of money from debtors or payment of money to creditors will not form part of a revenue-generating business.
Step 2: Close Bank Account(s)
LLP Form 24 can be filed only by LLP with no creditors and no open bank account. Hence, before filing LLP Form 24, you must close any bank account opened in the name of the LLP and obtain a closure letter.
Step 4: Prepare Documents
Along with Form LLP 24, you should also enclose the income tax return & LLP deed. If the LLP has not filed any income tax return and has not carried on any business activity, then it is not required. Else, a copy of the acknowledgement of the latest Income-tax return filed must be attached with the application for closing the LLP.
Step 6: Obtain Chartered Accountant Certificate
Once all the documents for filing LLP Form 24 are prepared, a statement of accounts disclosing NIL assets and NIL liabilities is certified by a practicing Chartered Accountant up to a date not earlier than thirty days of the date of filing of Form 24 must be obtained.
Step 7: File LLP Form 24
The above mentioned documents along with LLP Form 24 can be then filed with the MCA to strike off name of LLP. On processing the application, if found acceptable, the concerned Registrar of Companies would cause a notice to be published on the MCA website announcing the striking off of the LLP.