LLP Winding up
Winding up of LLP which has not commenced its business or inactive for one year
Striking off the Name of the LLP from the Register of LLP
A Limited Liability Partnership not doing any business activities or operation for a period of one year or more, can make an application to the registrar of companies for removing its name from the register of LLP’s maintained by the Registrar of Companies.
Not carry on the business activities or operation means not generating any revenue from the business or operation of the company.
Prerequisite before making application to strike off LLP:
- The LLP shall complete all the pending overdue filings up-to the end of the financial year in which the LLP ceased to carry on the business before making application for strike off.
- The LLP shall pay off all the pending statutory dues and liabilities.
- All the borrowings secured and unsecured shall be paid off by the LLP. In case any charge(s) is open against the LLP, then the same is required to be satisfied by the LLP.
- The LLP shall appoint chartered accountant for preparing the nil statement of assets and liabilities.
- Obtain the approval/NOC from the regulatory authorities, in case the LLP is registered with any of the regulatory authority such as SEBI, RBI, IRDAI etc.
- Close all Bank account opened in the name of the company and obtained bank account closure certificate(s) from banks.
Steps wise procedure for removal of name of Limited Liability Partnership:
- File all overdue returns such as forms LLP-11 and LLP-8 up to the end of the financial year in which the LLP ceased to carry on its business or commercial operation.
- Pay off all statutory dues and Sundry Creditors as of the date of making an application.
- File Income tax return of the LLP.
- Obtain the Approvals or No Objection Certificates from concerned Regulatory Authorities with which the LLP is registered e.g. LLP engaged in or registered with RBI for Banking Business has to obtain NOC from RBI before winding up of its affairs if any.
- Close all the bank accounts maintained in the name of the LLP and obtain the closure of bank account(s) in the name of the LLP.
- Obtaining a statement of account disclosing nil assets and nil liabilities, certified by a Chartered Accountant in practice. The MCA has introduced new strike off form 24 for LLP and in which the nil statement of accounts is required to be digitally signed by the practicing Chartered Accountant.
- Obtain consent of all the partners of the LLP and authorised one of the designated partner to sign the form digitally.
- Execute the Affidavits and Indemnity Bonds on appropriate value of stamp papers.
Make an application for striking off the LLP in e-Form 24 within 30 days from the date of a statement of account disclosing nil assets and nil liabilities, certified by a Chartered Accountant in practice digitally.
How much does it cost to close LLP?
FAQs on LLP Winding Up
For striking off the LLP, the LLP shall not carry on the business activities or operation for a period of one year or more. Therefore a LLP cannot be strike off within one year of its incorporation.
For striking off the LLP, an application in form 24 shall be made to the ROC with all the attachments. However it is to be noted that the LLP’s not carrying on any business activities or operations for a period of one year or more and having nil assets and liabilities can make application. Not carrying on the business or operation means not generating any revenues for a period of one year.
Making an application for strike off a LLP does not take much time, in case all the details and documents are available. However the Registrar of Companies takes time for verification of documents submitted along with the form. Normally ROC takes 03 to 12 months’ time for reverting on an application for strike off.
The LLP is required to file all its overdue returns i.e. annual return LLP-11 up to the end of the financial year in which the LLP ceased to carry on the business activities or operation. Therefore in case the LLP was carrying on business, then the LLP shall complete its pending ROC filings up to the date till which it was doing the business.
The LLP is required to file all its overdue returns i.e. shall file accounts of the LLP in form LLP-8 up to the end of the financial year in which the LLP ceased to carry on the business activities or operation.
If an LLP is not carrying on any business activities or operation for a period of one year or more then the LLP can make an application for striking off in form LLP-24 with all the attachments.
In case the LLP is not carrying on business or operation since its incorporation and form LLP-3 has not been filed by the LLP, then the same is required to be attached in the strike off form. However in case the LLP has commenced the business or operation, then the LLP shall file the form LLP-3 for filing of agreements and then proceed with strike off.
For filing forms with registrar of companies (ROC) normal class III DSC is required.
For dissolving the LLP, one has to check the initial LLP agreement filed by the LLP with Ministry of Corporate Affairs for checking the procedure for dissolution mentioned therein. In case nothing is mentioned then the LLP can be wind up as per the provisions of the LLP Act and Rules made thereunder. The LLP can also apply for strike off instead of winding up in case not carrying on any business activities or operation for a period of one year or more and not having any assets and liabilities and statutory dues.