Closure or Winding up of Limited Liability Partnership (LLP)
When a Limited Liability Partnership ceases to operate its business activities, it is still require to file various documents and returns with government authorities like ROC, Income Tax Department and Tax Authorities etc. So, it become very costly to run the Limited Liability Partnership (LLP) without having any business operation.
Thus, it is recommended to close or wind up the and remove its name from register of Limited Liability Partnership’s (LLP) by filing application to Ministry of Corporate Affairs. In case the Limited Liability Partnership (LLP) wants to close its business or where it is not carrying on any business operations for the period of one year or more, an application shall be made to the Ministry of corporate affairs for declaring the Limited Liability Partnership (LLP) as defunct and removing the name of the Limited Liability Partnership (LLP) from its register of LLP’s. Before filing application for winding up of a Limited Liability partnership, all income tax and other tax compliance should be completed and if there is any Goods and Service Tax Number, it should be surrendered and bank account is also closed.
For winding up of Limited Liability Partnership (LLP) which is having no business activity, Resolution is passed for its closure and Form 24 is required to be filed with Ministry of Corporate Affairs on payment of applicable fee. Where, there is business activity or creditors, then there is complete winding up process to be followed and resolution should be passed by 3/4th of partners to commence the winding up process. The facility of removing the name of Limited Liability Partnership (LLP) is a very cost effective, easy and hassle free way of winding up of Limited Liability Partnership (LLP) which are not carrying on any business, due to any reason whatsoever.
We at TaxMuneem take care of all your needs by providing personal supervision to compile forms and supporting documents.
Drafting of application for removal of name along with attachments.
Drafting of Statement of Account
Government Fee for filing application
Any other cost not mentioned in inclusion.
Cost of DIN/DSC of Partner
Copy of authority to make the application duly signed by all the partners
Copy of Acknowledgement of latest income tax return filed
Statement of Accounts disclosing “Nil” assets and “Nil” Liabilities
Affidavits signed by all the Designated Partners
Any other information required
2-3 week time for winding up of company not having business activity
4-6 month time for other winding up process as per winding up rules 2012
Closure of a LLP means winding up of Limited Liability Partnership and removal of its name from Registrar of LLP.
The grounds of dissolution of LLP depends upon whether it is a Voluntary action or it is by the order of the Tribunal.
Where the limited liability partnership (LLP) has not been in any business or operation for a period of one year or more, it can make application to Registrar for voluntary striking off its name from the register of LLP. Before filing the application in Form 24, it shall file all pending form 8 and form 11 till the year it ceases generation revenue from operations, also filed statement of nil assets and liabilities certified by chartered accountants, affidavits signed by designated partners and latest income tax returns for the period it operated business activities.
The Limited Liability Partnership can be voluntarily wound-up upon passing of resolution to wind such Limited Liability Partnership by at least three fourth of total number of partners. However, where there are secured or unsecured creditors then only after their approval the windup process can be completed.
The Compulsory grounds can be as follows:-
- If the Tribunal is of the opinion that it is just and equitable that the LLP should be wound up.
- If the LLP is unable to pay-off its debts.
- LLP has acted against the interest of the sovereignty and integrity of India.
- If the LLP has made a default in filing the Statements of Accounts and a Statement of Solvency or Annual Return for any 5 Consecutive Financial Years.
- If the Number of Partners at any time falls below 2 during a period of 6 months or more.
The process of voluntary winding up of Limited Liability Partnership can be summaries as under:-
- Paying off secured and unsecured creditors
- Surrender of all government registrations.
- Signing of declaration with affidavit of no outstanding creditors or payment within maximum 1 year by at least 2 designated partners.
- Filing of declaration with registrar.
- Preparation of statement of assets and liability as on date of passing of declaration.
- Passing of resolution for winding up by at least 3/4th number of partners within 15 days from filing declaration and filing the same to Registrar within 30 days.
- Obtaining consent of creditors for no objection and payment of their liability.
- Filing decision of creditors to registrar within 15 days of receipt of their consent.
- Publication of winding up resolution in the newspaper within 14 days from receipt of consent of creditors.
- Appointment of Liquidator of LLP and notice to registrar
- Filing of information by LLP Liquidator to partners
- Winding up order.
Every Limited liability partnership until its windig up shall require to comply with various government authorities, there are various reasons to strike of its name which are enumerated as under:-
- Cost of regular compliance with Ministry of Corporate affairs.
- Cost of regular compliance with Income tax department
- Any other regulatory authority as applicable.