Closing a Limited Liability Partnership

What are the Conditions for Closing an LLP?

Given below are the conditions under which closing an LLP (Limited Liability Partnership) can take place-

• It is not active since the date of its incorporation or for at least one year.
• It does not have any asset/liability on the date of application.
• The current account of LLP has been closed.
• Consent of all the parties, such as a creditor, authority or partner, has been obtained.

What are the Reasons for closing a Limited Liability Partnership?

Have a look at the key reasons for the closing a Limited Liability Partnership in India-

• When the LLP is registered for a specific purpose, and the purpose is complete.
• The LLP has become insolvent.
• When the LLP is not active for at least one year.
• The court has ordered the closing of LLP.
• The partners of the LLP are not interested in continuing the partnership.
• If, after the death of another partner/partners, the one who is alive wants to close the LLP.

What is the Process of Closing a Limited Liability Partnership?

In case the LLP wants to close its business or where it is not carrying on any business activity for at least one year then it can apply to the Registrar for declaring it as defunct and removing its name from the Register.

Any LLP can close its business by adopting any of the following two ways:

Declaring Limited Liability Partnership as Defunct

In case the LLP desires to close its business or where it is not carrying on any business activities for one year or more, it can make an application to the Registrar for declaring the entity- LLP as defunct and eliminating the name of the LLP from its register of LLPs in India.

The e-Form 24 is requisite to be filed for striking off the name of LLP under clause (b) of sub-rule 1 of Rule-37 of LLP, Rules 2008. Correspondingly, Registrar also has the said power to strike off any defunct LLP -satisfying himself of the need to strike off and having a reasonable cause. Nevertheless, the Registrar has to send a notice to the LLP about his intentions and then request them to send representation within one month from such notice.

The Registrar will publish such notice/content of the application on its website made by the LLP for one 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.

Winding Up of Limited Liability Partnership

Section 63, Section 64 and Section 65 of LLP Act 2008 govern the process for winding up the LLP in India. It is the process where all the business assets are pre-disposed to meet up the liabilities of the same, and if there is excess, it gets dispersed among the owners. The LLP Act, 2008 provides for subsequent two modes for winding up the LLP, i.e.

Voluntary Winding Up for Closing a Limited Liability Partnership

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

Compulsory Winding Up to Close an LLP

Before the introduction of the LLP (Amendment) Rules, 2017, the procedure for winding up an LLP used to be extended and burdensome. On the other hand, with its introduction and introduction of LLP E-Form 24, the procedure has been made simple and easy.

An LLP may be mandatorily wound up by the Tribunal:

• If the LLP decides that the 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 and Solvency or annual return for any five consecutive financial years or
• When the Tribunal is of the opinion that the LLP be wound up.

Steps to be followed while closing the Limited Liability Partnership:

• Calling A Board Meeting
  LLP will call a Meeting of Partners/Designated Partners for passing a resolution to close the Limited Liability Partnership and authorize a Designated Partner to apply with the Registrar.
• Setting Off Liabilities
  If there are any liabilities in the LLP, all liabilities must be cleared after passing the resolution before proceeding to the next step.
• Application To ROC
  For removing the name of the LLP under Rule 37(1)(b) and 37(1A) of LLP Rules, an application is filed in e-Form 24 with the Registrar along with the required particulars and attachments.

Surrender PAN of LLP

Once the Certificate of closure of the LLP is received from the Registrar, the partners need to surrender the PAN and TAN of the LLP.

Why Trust Corpbiz for Closing a Limited Liability Partnership?

Even though a limited liability partnership business is profitable, if you are not performing business operations, it’s better to close it to avoid losses. Given below are the reasons why business owners trust us for closing a limited liability partnership-

• Expert Assistance in Resolution Preparation for Closure of LLP
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• Guidance in Filing Form 24 LLP for Closing a Limited Liability Partnership
• Support in Removal of LLP Name to Ensure Successful Closure of Limited Liability Partnership
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