Strike-off of Limited Liability Partnership

 According to the Limited Liability Partnership Rules, 2009 LLP form 24 has been introduced by the MCA and with the introduction of LLP (Amendment) Rules, 2017; it is now possible to easily close an LLP by making an application to the Registrar for striking off the name of LLP.

What are the ways of striking off of Limited Liability Partnership?

1. Declaring the LLP as Non- functioning: If the LLP wants to close down the business or if it is not operating its business for a period of one year or more then it can make an application to the Registrar for declaring the LLP as defunct and removing the name of LLP from the registrar’s of LLP.
2. Winding up of LLP: Winding up of LLP is a process in which all the assets are disposed off to meet the liabilities of the business and surplus any, is distributed among the owners. There are two modes for winding up the LLP. These are as follows:

• 1. Voluntary winding up:
     Under voluntary winding up the partners of LLP may between themselves with mutual consent decide to stop or wound the business activities of LLP.
  2. Compulsory winding up:
     A LLP may be compulsory wound up by the tribunal in the following cases:

• • If the Limited Liability Partnership decides to be wound up the business operations by the Tribunal.
  • If the number of partners of the Limited Liability Partnership is reduced below to minimum statutory limit i.e., two for a period of more than six months.
  • If the Limited Liability Partnership acted against the interests of the sovereignty and integrity of India.
  • If the Limited Liability Partnership has made a default in filing with the registrar the Statement of Account and Solvency or Annual return for any five consecutive years.
  • For any just and equitable ground, the tribunal decided to wound up the Limited Liability Partnership.

Conditions for filing an application for closing a Limited Liability Partnership

• LLP should not be carrying its business operation of at least one year from the date of Incorporation.
• Consent of all the partners should be taken
• LLP should not have any assets or liabilities at the date of making application of striking off.
• ‘E-form 24 LLP must have filed with ROC, to indicate that the LLP has no debts or it is in position to pay all debts within a specific period and that LLP is not having any bank account at the time of making application.

Procedure for winding up of LLP:

The following procedure can be followed for winding up a LLP by filing Form 24:

1. Cease commercial activity: The form 24 can only be filed if the LLP never commenced business or have ceased the business activities. If the promoters wish to stop the all business activities, then the LLP must cease all commercial activity.
2. Close bank accounts: While filing the form 24, if any bank account is opened with the name of LLP must be closed and a letter evidencing closure of bank account must be obtained, therefore it is necessary to close all the bank accounts with the name of LLP before filing form 24.
3. Prepare Affidavits & Declaration: All the designated partners of the LLP must prepare an affidavit that the LLP ceased to carry on business activities from (date) or has not commenced business.
   The partners must also declare that the LLP has no liabilities or indemnify any liability that may arise ever after wound up of Limited Liability Partnership.
4. Prepare Documents: Along with the form 24 the ITR of the Limited Liability Partnership and Limited Liability Partnership deed must be enclosed. If the Limited Liability Partnership has not commenced business, then ITR is not required. Else, a copy of acknowledgement of latest ITR filed must be attached.
5. File any pending Documents: Any pending documents, any overdue returns in form 8 and form 11 up to the end of the financial year in which the Limited Liability Partnership ceased to carry on its business operations must be filed before filing of form LLP 24.
6. Obtain Chartered Accountant Certificate: When all the documents for filing of form 24 is prepared, a statement of accounts with nil assets and nil liabilities, certified by a Practising Chartered Accountant up to a date not earlier than 30 days of the date of filing of form 24 must be obtained.
7. File LLP Form 24 to MCA: The above mentioned documents along with the form 24 can be filed with the MCA to strike off the name of LLP. On processing the application, if found acceptable, the concerned registrar of companies would cause a notice to be published on the MCA website announcing the striking off of the LLP.