Closing a Limited Liability Partnership
An LLP can be closed, if it has not commenced business or is not engaged in the activity of business for the last 1 year. The closure application needs to be filed with the mutual consent of all the partners of the firm.
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Closing an LLP
For closing an LLP, a resolution has to be filed by directors of the company with the Registrar of Companies, within 30 days of its passing. Within 15 days of passing the resolution the statement of assets and liabilities after the closure of accounts, to the date of winding up of the LLP, attested by at least two partners must be submitted. A report of the valuation of company assets must be prepared. Once this has been done, the majority of partners need to make a declaration to the effect that the LLP has no debts or that it is in a position to pay all debts within a specified period, not exceeding one year from the date of winding up of the company.
While registering for a business, you have different options like LLP or Limited Liability Partnership. If you have registered your company as LLP, then you would be required to file mandatory returns whether it is doing business or not. In case you fail to file the returns, then the LLP will be subjected to penalties under the LLP Act, and the partners in the firm will be liable to the same penalties. Hence, filing returns becomes a mandatory act in the case of LLP.
So, if you are not planning to file the return and close the LLP for certain reasons, then it must be closed as per the LLP Act. legaltoast is a popular name when it comes to registration or closure of the LLP.
If you are willing to close the LLP, then it must meet the following conditions:
- The LLP should be inactive for a period of at least 1 year, or it should be inoperative from the date of establishment.
- The second condition is that the LLP should not have any assets on the date of application.
Moreover, there is detailed paperwork that needs to be done. The first thing that you need to do is to submit the application along with the required fees and affidavit along with consent from all partners of LLP. In addition, for the closure of LLP, you need to submit the IT return and a Statement of Accounts (of the last 30 days) from the date of application.
At this point, you must know that the closure of LLP can take up to two months, provided the partners are quick to complete the procedures involved.
Conditions For Filing An Application For Closing A Limited Liability Partnership
To file an application for closure of LLP, the company has to fulfill the following conditions:
- The LLP should be inoperative from the date of incorporation OR for a period of at least one year.
- The LLP should have the consent of all its partners, for closure.
- The LLP should not have any assets or liabilities as per the date of application.
- Form 24 LLP is filed with ROC, to indicate that the LLP has no debts or it is in a position to pay all debts within a specified period.
Checklist for LLC Requirements to be eligible for closure
- The LLP to be closed down should not have commenced business after incorporation.
- The LLP to be closed down has not been engaged in any business for the past year.
- The LLP to be closed down has no assets and liabilities.
How to Close LLP in India
Step 1: Resolution
A special resolution has to be passed by all or ¾’thof the partners of the company, agreeing to dissolve the partnership.
Step 2: Form No. 1
Within 30 days of passing the resolution, form no.1 is filed with the Ministry of Corporate Affairs (MCA) with a copy of the resolution,
Step 3: No Debt Declaration
At least two members of the LLP have to declare that it has no debts or liabilities. Or if it does, it will be settled within one year from the commencement of winding up.
Step 4: Form 4 & Value of Assets
Form No. 4 along with a report of the value of LLP’s assets has to be submitted to the registrar within 15 days of filing the forms and a statement declaring that the LLP is not being closed to cheat anyone.
Step 5: Creditor Consent
The next step is to acquire consent from the creditors of the LLP, to wind up the business. For this purpose, at least ⅔’rd of company creditors have to provide consent.
Step 6 – Filing Form 6
Within 14 days of receiving consent from creditors, an advertisement has to be filed in the local newspaper. In case if the LLP has assets or liabilities, a liquidator is appointed and his/her statement needs to be filed using form 6.
Step 7: Filing Form 9
Prepare the LLP’s final account statement, and submit them along with form 9 to conclude all formalities.
legaltoast Procedure for Winding Up
Form 24 LLP
Form 24 will be filed with the Registrar of Companies along with the declaration from the partners. In addition, you need to submit indemnity bonds and an affidavit stating that the information is true to the knowledge of all the partners.
The Registrar of Companies will publish a notice on its website stating the contents of the application, for a period of one month.
Removal Of LLPs Name
After one month, the Registrar of Companies will remove the LLP’s name from the register and publish a notice in the Official Gazette, thereby legally closing/dissolving the LLP.
Documents Required from Partners & Designated Partners For Closing An LLP
Partners need to submit the following documents in order to close the LLP:
- PAN Card of Partners- Apart from the application form and indemnity which needs to be submitted to the registrar, for the closure of LLP, you are also required to submit PAN cards of all the partners and designated partners of LLP.
- Aadhaar Card of Partners- Similar to PAN card, another document that needs to be submitted for closure of LLP is the Aadhaar card of all the partners and designated partners of LLP
- Latest Address Proof of Partners- In addition to the above mentioned two documents, the latest address proof of all the partners of LLP is also needed to be submitted.
- Consent letter- For the closure of LLP, you would also be required to get the consent letter signed by all the partners and submit it along with form and fees.
FAQs on Closing a Limited Liability Partnership
The Private Limited Company Registration process is completely online, so you don’t even have to leave your home to get your entity registered. At legaltoast, we complete the Company Registration online within 14 days.
legaltoast Company Registration package includes:
- DIN and DSC for two Directors
- Drafting of MoA & AoA
- Registration fees and stamp duty
- Company Incorporation Certificate
- Company PAN and TAN
- Zero Balance Current Account – Powered by DBS Bank *
FAQs on Online Company Registration
If you are planning to close the LLP or Limited Liability Partnership, then you have to follow the process mentioned below:
- Closure of business operations- When you are planning to close the LLP, then you must first close the current business operations.
- Close the bank account- Once you have closed business operations
- Preparing the closing statement of accounts- The next step is to close the statement of accounts.
- Application to ROC-LLP Form 24- At this stage, the partners of LLP are required to file an application to the registrar along with an affidavit and fees along with the consent of all the partners.
In case you are unsure of the steps and process of closure of LLP, then you can connect with legaltoast for assistance. We have a team of qualified professionals who will help you with the same.
If the LLP fulfills the following condition, it can file an application for striking off its names from the register of LLP:
- The LLP must have a PAN
- The LLP should be inactive for a period of at least one year or non-operational from the time of incorporation
- There should be no live bank account at the time of application
- The LLP should have filed the latest IT returns.
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