Being one of the most popular ways of doing business in India, Limited Liability Partnership or popularly known as LLP is a mixture of a partnership firm as well as a company. But closure of LLP can seem to be complicated even though it is not. To shut down your LLP, follow the guide here thoroughly.
Exclusive Benefits
Prevention of further losses
- The closure of LLP can prevent further losses from happening in the partnership firm.
- Also if there is no business activity or the business is not doing well,
- It is better to close down the Limited Liability Partnership
Creation of another company
- If the LLP was commenced for a particular long term project and it has been completed,
- There is no reason for the LLP to carry on
Insufficient partners
- If the partners have expired and only one partner remains,
- It is better to close down LLP in such cases.
Checklist for closure
Here is a checklist of what you need to do for the closure of Limited Liability Partnership
- Pass a special resolution by at least three fourth the number of partners
- File Form 1 within 30 days of passing the special resolution
- A declaration copy signed by majority of partners
- A report of the values of the asset of the LLP
- An affidavit with a statement that the closure is not made o defraud anyone
- Consent copy from at least two thirds of the unpaid creditors
- Final copy of the accounts with Form 9
How to convert?
- Since it is a company you will be required to Call for a board meeting and pass a resolution by at least three fourth of the partners which constitute majority partners of the firm.
- You will have to file Form 1 within 30 days of passing the resolution along with the resolution copy.
- The LLP is required to make a declaration by majority of partners thatA
- All its dues and liabilities can be paid off within 1 year of the winding up.
- Within 15 days of the winding up of the company,
- An affidavit along with other prescribed forms has to be attached with form 4
- With a signed declaration that the closure is not being carried out for the purposes of defrauding anyone.
- Obtain consent for the closure from at least two thirds of the unpaid creditors
- Provide advertisement for the closure of LLP in a local newspaper within 14 days.
- File form 9 along with the finalization of the accounts of the LLP.
Documents required
- An application required stating reasons to close LLP in e form 24
- Consent of all creditors and partners for performing the closure
- Statement showing assets and liabilities of the LLP
- Report of valuation of assets
- Income tax return acknowledgement
- No objection certificate
- Digital signature Certificate or DSC of the signing partners
- Resolution copy for winding up
FAQs
Why do I need to file e form 24?
For applying to the registrar for striking off the company
Will the registrar issue a certificate after striking off LLP?
No, the registrar will not issue any certificate except approving the application and changing the status of LLP to ‘under process of striking off’.
How long does it take to strike off the LLP?
It generally takes 4 to 6 months for the process of striking off to get complete.
Should all the partners consent to the closure?
Yes, the consent of all the partners is required
What is a defunct LLP?
A defunct LLP depicts that LLP has not started any business for the past 1 year.
Can the LLP be closed if there are assets and liabilities in the Balance sheet?
No, it cannot be closed
Whether a liquidator is required to appointed for the process?
No not required
After strike off, does PAN need to be surrendered?
Yes, you need to surrender it.
What are the options to close LLP?
By declaring LLP as either defunct or carry out the winding of LLP.
Within how many days the form 1 must be submitted?
It must be submitted within 30 days of passing the resolution.