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 to authorize any Designated Partner of the LLP to apply with the Registrar.

Setting Off Liabilities

If there are any liabilities in the LLP, it will set off all the liabilities before the next step after passing the resolution.

Application To ROC

For removing the name of the LLP under Rule 37(1)(b) and 37(1A) of LLP Rules, an application is made in e-Form 24 to the Registrar with below- mentioned 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.