Limited Liability Partnership (LLP) is one of the most popular business entities in the corporate sphere. Since there is a definite procedure to register an LLP in order to commence its operations, there is also a predefined process to close an LLP. Entrepreneurs who have started their business with a great vision may wish to close it due to many reasons.
This piece thoroughly talks about the closure procedure for LLP. Read along!
Limited Liability Rules, 2009 (Rule 37) explain the process regarding striking off a defunct LLP company. Defunct LLP refers to those Limited Liability Partnerships that stopped functioning or operating. Limited Liability Partnerships need to be defunct for a minimum of 1 year to be eligible for applying for LLP closure to the Registrar.
The following sections discuss closing a Limited Liability Partnerships by filing Form 24.
Step 1
Stop Commercial Activity
The filing of Form 24 is only possible when LLPs have not started a business yet or have stopped their commercial activity. Therefore, LLPs willing to close their companies must cease all kinds of business operations and then apply through this form.
Step 2
Close Bank Accounts
LLP closure with Form 24 can happen only when there are no open bank accounts as well as any creditors. Thus, before applying for closure with Form 24, LLPs must close bank accounts and obtain evidence of the same from the respective banks.
Step 3
Prepare Affidavits and Declaration
While closing an LLP company, all the appointed directors need to execute an affidavit (individually or jointly) stating that the LLP has stopped its commercial activity from a particular date. In case an LLP has not commenced its operations, it needs to mention that too in the affidavit.
In addition, an LLP company must declare that it has no liabilities and indemnify for losses that may come up later after striking off its name from the list of registered companies.
Step 4
Gather All the Documents
At this stage, LLPs need to accumulate important documents and submit them along with Form 24.
Step 5
File Pending Documents
Once an LLP company gets an Incorporation Certificate, it must file the LLP agreement within 30 days with the Ministry of Corporate Affairs (MCA). In case an LLP company misses to file an LLP agreement, then the company must file the initial LLP agreement (entered but not filed) with any amendments made.
LLP companies must file any overdue returns (in Form 8 and Form 11) of a financial year during which they ceased their commercial activities before filing Form 24.
Step 6
Get CA Certificate
After gathering and preparing all the required documents for filing Form 24, an LLP company must get a statement with details of accounts having NIL assets and NIL liabilities. A practising Chartered Accountant must certify this document up to a date that must fall within 30 days of the filing date of Form 24.
Step 7
File Form 24
At last, an LLP company must file all documents and the LLP closure Form 24 with MCA to complete the striking-off procedure. After verifying the documents and processing the application, if the respective authority does not find any error or discrepancy, they will issue a notice (and publish it on the MCA website) announcing the striking off of that LLP.
The steps mentioned above clearly answer the question - how to close an LLP company? Now, let’s learn about the documents required for LLP closure.
Here is a list of all the essential documents LLPs need to submit in order to close it.
An LLP company can apply for closure of the company if it -
Read the above-mentioned steps for the closure procedure of LLP attentively and strike off the name of a defunct company from the list of registered companies easily with the help of Form 24.
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