LLP Winding Up

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       The LLP can apply for the Striking off of its name under the provisions of the Limited Liability Partnership Act, 2008 and the rules made thereunder. The Registrar of Companies has a power to strike off the name of the LLP from the Register of Companies on suo-motto basis but a LLP can also file the application in the prescribed form to the ROC for removing the name of the LLP after extinguishing all its liabilities and after complying with some conditions.

What are the Reasons to Strike Off of a LLP ?

  1. No Compliance Burden:  Once the LLP is closed, there does not exist the LLP as such hence the promoters or directors get free from compliance responsibilities and possible dangers of non-compliances.
  1. Faster route of Closure: Inactive or non-functioning LLP can be closed swiftly in about 3 to 16 days, whereas traditional methods take longer and are more cumbersome procedures.
  1. Avoid Fines:
    If the inactive or non-functioning LLP is not following legal compliances, it may incur hefty fines and penalties and punishments for the officers of the LLP in certain cases including debarment of the Directors from starting another LLP. Hence, it is better to officially wind up a LLP that is inactive and avoid potential fines or liabilities in the future.

Any LLP can close down its business by adopting any of the following two ways, which are as follows:-

A) Declaring Limited Liability Partnership As Defunct

In case the LLP desires to close down its trade or where it is not carrying on any business activities for the period of 1 year or more, it can make a submission to the Registrar for declaring the entity- LLP as defunct & eliminating the name of the LLP from its register of LLP’s in India.

Correspondingly, Registrar also has the said power to strike off any defunct LLP -satisfying himself of the need to strike-off and has rational cause. Nevertheless, registrar has to send a notice to the LLPs of his intention in this case, and request to send their representation within 1 month from the date of notice.

The Registrar will publish such notice/content of the application on its website made by the LLP for a period of 1 month for the information of the general-public. Registrar may strike off the name of LLP if no reply is received within the cited period.

B) Winding Up Of Limited Liability Partnership

It is the process where all the assets of the business are predisposed off to meet up the liabilities of the same and if there is excess any, gets dispersed among the owners. The LLP Act, 2008 provides for subsequent 2 modes for winding up the LLP i.e.:

Voluntary Winding Up

Under this, the partners may between themselves make a decision to stop & wound up the operations of the LLP.

Compulsory Winding Up

A LLP may be mandatorily wound up by the Tribunal,—

  • If the LLP decides that limited liability partnership be wound up by the Tribunal;-
  • If, for a period of more than six months, the number of partners of the LLP is reduced below two;
  • If the LLP is unable to pay its debts;
  • If the LLP has acted against the interests of the sovereignty and integrity of India, the security of the State or public order;
  • If the LLP has made a default in filing with the Registrar the Statement of Account & Solvency or annual return for any five consecutive financial years; or
  • If the Tribunal is of the opinion that it is just and equitable that the LLP be wound up.

What are the Essential Documents Required to Close an LLP?

An application is required to be made in e-Form 24 to strike off the name of the LLP, with following below mentioned documents:-

  • 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:-
  1. 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);
  2. That the limited liability partnership has no liabilities and indemnifying any liability that may arise even after striking off its name from the Register;
  3. 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;
  4. 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 Partners
  • Indemnity Bond:-
  1. 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

What is the procedure for strike off the LLP ?

Step 1: The LLP shall hold Partners Meeting for approval for striking of a name of the Company

Step 2: LLP shall obtain the Consent of all the partners for such strike off.

Step 3: If the LLP is regulated by any other authority than shall take approval from them.

Step 4: After taking approval the LLP shall file an application in LLP form 24.

Step 5: After receiving an application, ROC shall publish a public notice. Any objection to the proposed strike off shall be sent within 30 days.

Step 6: After prescribed time from the date of publication of notice in the Gazette notification of India, ROC shall strike off the name and the LLP shall stand dissolved.

Frequently Asked Questions (FAQ’s)

Can any LLP apply for Strike Off?

Yes. LLP scan also apply for the Striking off its name to the ROC under the provisions of the LLP Act, 2008 and the rules made thereunder by filing of LLP Form No. 24 with the ROC through MCA Portal.

What are the differences among terms strike off and winding up?

Winding up is the procedure through which the assets of the LLP are sold and liabilities are paid. Remaining surplus if any is distributed among the partners last in priority. While Strike Off is the procedure through which the assets of the LLP are sold and liabilities are paid. However, the Strike off procedure is not that much lengthy and stringent still it may take time more than a year for approval.

Are there any hidden charges after I take any of your service?

No Hidden charges. Every detail regarding charges is transparent as you can see in the Quotation file in your mailbox.

How much time is needed for LLP Strike Off?

LLP Strike Off usually takes 3 – 16 working days subject to the approval of the Central Govt. and the receipt of documents from the clients.

Can I get any proof or evidence for LLP Strike Off?

Yes. The Notice of Strike off the name of the LLP from the register if the Companies will be issued by the Jurisdictional Registrar of Companies through Email in soft Copy.

Can a LLP is eligible to be restored after successfully strike off its name?

Pursuant to the provisions of the LLP Act, 2008, the name of the Struck off LLP can be restored by the National Company Law Tribunal(NCLT)If a LLP, or any former member, creditor or liquidator or any person who had a contractual relationship with the LLP, feels aggrieved by the LLP having its name struck off from the register of companies/LLPs may make an application before the expiry of Six Years from the date of publication in the Official Gazette of the notice of Strike off the name of the LLP by the ROC.

Do I need to file all outstanding Annual Returns before delivering the application for Strike Off?

Yes. LLP is required to file all the outstanding Annual Returns and the Financial Statements under the LLP Act, 2008before making an application for Strike off. Failure to do so will make the LLP liable to prosecution.

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