Strike Off of LLP

Are you looking to close your LLP? It's important to file a Closure of LLP application with the ROC to update the MCA database and dissolve your LLP. Failure to file mandatory annual returns can result in penalties and prosecution for the LLP and its designated partners or partners under the LLP Act. Not filing annual returns is not acceptable, even if the LLP has ceased operations. An LLP remains in existence until a formal closure process is completed in accordance with the LLP Act.

As a distinct legal entity, an LLP must be formally closed in compliance with the law. An LLP that meets the following criteria can apply to close its registered firm name from the Register of LLP:

• The LLP has not been operational since incorporation or has been inactive for at least one year.
• The LLP has no assets, properties, or liabilities as of the application date.
   

To file an application for closure or striking off the firm name, you must pay the specified fee, provide the consent of all partners, and submit affidavits and indemnity by a Chartered Accountant along with copies of the most recent income tax return and bank account statement. The LLP can make a formal application to the Registrar to strike its name from the register if it is defunct.

If your LLP has never conducted any business activity or started commercial operations, it is considered a defunct limited liability partnership. In this case, if the firm has no assets, properties, or liabilities, and has been inactive for at least one year, it can file an application for closure.

If your LLP or Limited Liability Partnership firm has not been carrying out any business activities since its establishment or for at least one year, you may be eligible to apply for closure. To do so, you must meet the following criteria:

• You have filed all the necessary annual returns in Forms 8 and 11 up to the end of the financial year in which the LLP stopped operating.
• You have to close any bank accounts associated with the LLP and obtain a certificate to that effect.
• The LLP has no outstanding obligations or debts to any creditors or lenders.
• You have filed income tax returns for the immediate financial year.

If you meet these requirements, you can initiate the process of closing your LLP by filing an application with the Registrar of Companies. It's important to ensure that all necessary documents and fees are submitted correctly to avoid delays or penalties.

• The PAN of the Limited Liability Partnership must be provided.
• The agreement made by the partners of the Limited Liability Partnership is required.
• If applicable, the latest IT return must be submitted.
• A statement or certificate confirming the closure of the bank account is necessary.
• The latest account statement or report of the Limited Liability Partnership must also be provided.

• Partners' PAN for the LLP closure form
• Aadhaar card or number of LLP partners
• Address proof of LLP partners for the closure

Winding up an LLP through the tribunal

An LLP may be wound up through the intervention of a tribunal in the following scenarios:

• The LLP itself seeks to wind up.
• The LLP has fewer than two partners for a period of at least 6 months.
• The LLP is unable to pay off its debts.
• The LLP has acted against the interests of India's sovereignty, integrity, public order, or state security.
• The LLP has failed to submit its statement of accounts and solvency or annual returns for any five consecutive financial years to the Registrar.
• The tribunal believes that winding up the LLP is fair and just.
   

Voluntary winding-up of an LLP

To initiate the winding-up process of an LLP, 3/4th of the partners must give their approval. The designated partners must then declare that the LLP does not have any outstanding debts or that any debts will be fully paid within a year from the date of winding-up. The LLP partners must also declare that the winding-up is not due to any fraudulent activities. The declaration should include a statement of the assets and liabilities up to the latest date before the winding-up declaration.

If there are any assets relevant to the LLP, a valuation report should be prepared and submitted. The voluntary winding-up process will commence from the date of passing the resolution for winding-up.

To initiate the winding-up process of an LLP, a majority of the partners must provide official authorization in Form-2, declaring that they have no outstanding loans or debts, or that they will repay them within a year from the date of filing the resolution for winding up.

Once the resolution for winding up is filed and consent is received from investors or creditors, an advertisement must be published within 14 days in a newspaper located in the same place as the registered office or principal place of the LLP. The advertisement should mention the resolution for winding up of the LLP.

The LLP winding-up or dissolution process comprises three steps, starting with voluntary dissolution. In this step, partners and creditors must pass a resolution, and all partners must sign an affidavit and bond, along with other necessary documents, and submit the form to strike off the name of the LLP with the MCA.

This process cannot be applied to the LLP closure process. After passing the resolution and consulting with investors or creditors if any, the LLP must appoint a Liquidator within 30 days. The Liquidator will carry out all necessary tasks to prepare a liquidation report that outlines the specific procedure for winding up the firm. This report, along with the resolution approving the liquidation and a valuation report, will be submitted to the Registrar.

After submitting the liquidation report and valuation report, an application form must be filed with the tribunal for dissolution. If the tribunal approves the winding-up process, an order will be issued to dissolve the LLP, and the liquidator must submit the order to the registrar. If the registrar finds everything in order, a notice will be published in the Official Gazette stating the winding up, strike off, or dissolution of the LLP. If there are no objections to the notice within 30 days, the registrar will proceed to dissolve, wind up, or strike off the LLP.