How to Close an LLP in India – Step-by-Step Procedure

When the Limited Liability Partnership (LLP) is not doing business anymore or its partners decide to discontinue the same they shall wind up the LLP in the manner provided under the LLP Act, 2008 and the Limited Liability Partnership Rules, 2009. Ceasing business operations is not the same as dissolving an LLP. The LLP carries on until it is legally dissolved, and is subject to further statutory obligations, such as the filing of annual documentation, and further penalties, for its failure to so comply. Under this post, you will come to know the Procedure for closing LLP by way of Strike off its name from the Register of LLPs.

Table of Contents

What is LLP Closure?

LLP closure is the process through which an LLP’s name is removed from the Register kept by the Registrar of Companies (ROC). With the Registrar’s permission and publication of the notice, the LLP is dissolved and it will cease to be in existence as a body corporate.

Legal Process of LLP Closure

LLP closure is primarily governed by:

Section 75 of the Limited Liability Partnership Act, 2008

• Rule 37 of the Limited Liability Partnership Rules, 2009 (Application for striking off the name of an LLP)

• Relevant notifications and circulars issued by the Ministry of Corporate Affairs (MCA)

Who Is Eligible to Apply for Closure of LLP?

An application for striking off may generally be made where:

The LLP has not commenced business, or
The LLP has ceased to carry on business, and
The partners decide to voluntarily close the LLP after satisfying the prescribed conditions.

Conditions for Striking Off an LLP

Before applying for closure, the LLP should generally ensure that:

It has ceased carrying on business.
It has no outstanding liabilities.
The consent of all partners has been obtained.
All overdue statutory filings have been completed up to the date of application.
Income Tax Return, if applicable, has been filed.
Any pending regulatory issues have been resolved.

Documents Required for LLP Closure

The following documents are generally required:

Application in e-Form LLP Form 24
Copy of authorised letter to make application duly signed by all partners
Consent letter (all designated partner)
Resolution
Copy of acknowledgement of latest ITR (Last filed ITR)
Identity proof (all designated partner)
Bank account closure
Form 8 (last filed)
Form 11 (last filed)
Affidavit and bond (all designated partner)
Statement of account (not later than 30 days)
Copy of LLP Agreement and amendments.

Stepwise Process to Close an LLP.

Step 1: Pass Consent of Partners

All partners should agree to close the LLP and authorize the filing of the application.

Step 2: Shut down business operations and file final tax returns

Cease business activities and pay all debts, liabilities, taxes and statutory obligations.

Step 3: Complete Pending Compliances upto the year LLP was operative

File all pending annual returns, statements of account, and other statutory forms required under the LLP Act upto the year LLP was operative before applying for closure.

Step 4: Prepare Statement of Accounts

Draft a Statement of Account to present the financial position of the LLP and get it certified by a Chartered Accountant.

Step 5: Prepare the Necessary Documents

Sign the affidavits, indemnity, partner consent and such other documents as may be prescribed.

Step 6: File LLP Form 24

Submit LLP Form 24 electronically with the Registrar of Companies along with the prescribed documents and filing fee.

Step 7: Verification by ROC

The Registrar examines the application, and may seek clarification.

Step 8: Strike Off and Dissolution

If the Registrar is satisfied that all the requirements of the law have been complied with, The Registrar shall issue a notice to be published of the striking off the name of the LLP from the Register and the LLP shall stand dissolved

Post-Closure Compliance

After the LLP is struck off:

Preserve important records and documents for future reference.
Ensure all tax and regulatory matters have been concluded.
Respond to any lawful authority if information is required after dissolution.

Results of non-compliance

Failure to legally close an inactive LLP may result in:

Additional filing fees for overdue returns.
Penalties under the LLP Act and Rules.
Continued statutory compliance obligations.
Regulatory notices from the ROC.
Difficulty in future business ventures due to non-compliance.

Mistakes to be Avoided

Applying for closure without clearing liabilities.
Not filing overdue LLP annual returns.
Providing incorrect financial statements.
Ignoring Income Tax compliance.
Filing LLP Form 24 without complete supporting documents.
Assuming that inactivity automatically dissolves the LLP.

Why to choose My Legal Business LLP?

At My Legal Business LLP, we provide complete assistance for LLP closure and ROC compliance.

Our services include:

LLP Strike Off Advisory
Preparation and Filing of LLP Form 24
ROC Compliance Review
Settlement of Pending MCA Filings
Income Tax Compliance Assistance
End-to-End LLP Closure Support

Our expert team make sure to close LLP hassle free and in line with Limited Liability Partnership Act, 2008, the LLP Rules, 2009 and any further directives of MCA.

Conclusion

The closure of an LLP is a legal process and will require the limited liability partnership to be close in accordance with the LLP Act, 2008 and Limited Liability Partnership Rules, 2009. Halting business operations does not terminate an LLP’s existence or its obligation to comply. Partners should ensure that all liabilities are discharged, pending statutory filings are made and the necessary documents are in order prior to applying for striking off by way of LLP Form 24. A timely and compliant exit will save you from unnecessary fines, ongoing compliance fees, and potential legal headaches in the future, and let you walk away clean from the business world.

Frequently Asked Questions (FAQs)

1.Which Act is applicable to the closure of LLP?

The closure of LLP is governed by the Limited Liability Partnership Act, 2008 and the Limited Liability Partnership Rules, 2009.

2. What is the form to strike off an LLP?

The application for striking off an LLP is made in LLP Form 24.

3. Can an LLP be closed if it has outstanding liabilities?

No. The LLP should settle all liabilities before applying for striking off.

4. Is partner consent required for LLP closure?

Yes. The consent of all partners is generally required before filing the application.

5. Is it necessary to file pending annual returns before closure?

Yes. Pending statutory filings should generally be completed before applying for LLP closure.

6. Is a Chartered Accountant’s certificate required?

Yes. A Statement of Account certified by a Chartered Accountant is required with LLP Form 24.

7. Can an LLP be closed if it never started business?

Yes, A Limited Liability Partnership which has not commenced its business can also apply for striking off, subject to fulfilling the necessary legal formalities.

8. What happens to an inactive LLP (Limited Liability Company)? Is it dissolved by the law?

No, The LLP is a body corporate, and it continues to exist until its name is removed from the register by the Registrar.

9. How long does it take to close LLP?

The time depends on how complete the application is and on how long it takes the ROC to process it.

10. Can we file for closure of LLP when there is litigation?

Usually, pending litigation or settling of legal related issues may have an impact on the eligibility for striking off. These matters should be resolved or adequately disclosed prior to making the application.