CLOSURE OF LIMITED LIABILITY PARTNERSHIP

[Mr. M. GOVINDARAJAN]

Limited Liability Partnership

Limited Liability Partnership (LLP) means alternative corporate business form that it gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its name.  It is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.

Closure of LLP

An LLP may be wound up as per the procedure similar to that of Companies Act, 2013.  The LLP may also be closed either by the Department or by the LLP itself.

Closure by Registrar of Companies

Section 75 of the Limited Liability Partnership Act, 2008 provides that where the Registrar has reasonable cause to believe that a LLP is not carrying on business or its operation, in accordance with the provisions of this Act, the name of LLP may be struck off the register of limited liability partnerships in such manner as may be prescribed.  The Registrar shall, before striking off the name of any LLP under this section, give such limited liability partnership a reasonable opportunity of being heard. 

Rule 37(a)(1) of Limited Liability Rules, 2009 provides that where a LLP is not carrying on any business or operation or a period of two years or more and the Registrar has reasonable cause to believe the same, for the purpose of taking suo motu action for striking off the name of the LLP.

The Registrar shall send a notice to the LLP and all its partners, of his intention to strike off the name of the limited liability partnership from the register and requesting them to send their representations along with copies of the relevant documents, if any, within a period of one month from the date of the notice.

The notice issued to the LLP and all its partners shall also be placed on the website of the Ministry of Corporate Affairs for the information of the general public for a period of one month.

At the expiry of the time mentioned in the notice or one month, the Registrar may, by an order, unless cause to the contrary is shown by the LLP, or the Registrar is satisfied that the name should be struck off from the register, strike its name off the register, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the LLP shall stand dissolved.

The Registrar, before passing an order shall , where he has sufficient cause to believe that the LLP has any asset or liability, satisfy himself that sufficient provision has been made for the realization of all amount due to the LLP and for the payment or discharge of its liabilities and obligations by the limited liability partnership within a reasonable time and, if necessary, obtain necessary undertakings from the designated partner or partner or other persons in charge of the management of the limited liability partnership.    The assets of the LLP shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the limited liability partnership from the register.  

The liability, if any, of every designated partner of the LLP dissolved, shall continue and may be enforced as if the LLP had not been dissolved.

Nothing in this rule shall affect the power of the Tribunal to wind up a LLP, the name of which has been struck off the register.

Closure by LLP

Where a LLP is not carrying on any business or operation for a period of one year or more and has made an application in Form 24 to the Registrar, with the consent of all partners of the LLP for striking off its name from the register.  In this procedure the notice is not required to be issued by the Registrar of Members to the LLP and its partners.

Where the LLP is regulated under a special law, the application for removal of its name shall be accompanied by approval of the regulatory body constituted or established under that law.

The LLP shall-

•  file overdue returns in Form 8 and Form 11 up to the end of the financial year in which the LLP ceased to carry on its business or commercial operations before filing Form 24;
• enclose along with Form 24-

•  a statement of account disclosing nil assets and nil liabilities, certified by a Chartered Accountant in practice made up to a date not earlier than thirty days of the date of filing of Form 24;
•  an affidavit signed by the designated partners, either jointly or severally, to the effect,
• that the LLP  has not commenced business or where it commenced business, it ceased to carry on such business from ………….(dd/mm/yyyy);
• that the LLP has no liabilities and indemnifying any liability that may arise even after striking off its name from the Register;
• the LLP 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;
• that the LLP has not filed any Income-tax return where it has not carried on any business since its incorporation, if applicable.
• a copy of the acknowledgement of the latest Income-tax return filed under the  and the rules made there under for the time being in force, where the LLP has carried out any business and has filed such return.
•  copy of the initial LLP agreement, if entered into and not filed, along with changes thereof in cases where the LLP has not commenced business or commercial operations since its incorporation.

The contents of an application made by the LLP shall also be placed on the website of the Ministry of Corporate Affairs for the information of the general public for a period of one month.  At the expiry of one month, the Registrar may, by an order, strike its name off the register.

The Registrar will not issue a certificate for closure of LLP. After scrutiny of application, the Registrar will approve the application form. The status of LLP will be changed to ‘under the process of striking off’.   The whole process may take 3 to 6 months to complete. After approval of the application, the details will be placed on the website of the Ministry of Corporate Affairs for the information of the general public for a period of one month. After the expiry of one month from placing the details in MCA website, the Registrar will issue an order for striking off the LLP name from the register, and shall publish notice in the Official Gazette. After the notice is published in the Official Gazette, the LLP shall stand dissolved.

Filing of e-Form 24

Approval of this form shall not be allowed, if any other form is pending for approval or for payment of fee against the LLP.   The following particulars are to be furnished in this form-

• LLP identification number;
• Name of the LLP;
• Address of the Registered office of the LLP;
• Email id of the LLP;
• Reasons for making the application;
• Whether up to date income tax return is filed or not;
• Date from which the LLP ceased to carry on its business;

 The following are the documents required to be attached with this form-

• Copy of detailed application;
• Copy of authority to make the application;
• Copy of consent of all partners;
• Copy of consent of all creditors;
• Copy of the undertaking/ indemnity bond for striking off name;
• Copy of statement of assets and liabilities duly certified as true and correct by auditor/chartered accountant in practice;
• Copy of acknowledgement of latest Income tax return;
• Any other information can be provided as an optional attachment.

The application shall be digitally signed by the designated partner along with DPIN.