LLP wants to close down its business or where it is not carrying on any business operations, it can make an application to the Registrar of Companies for declaring the company as defunct and removing the name of the LLP from its register of LLP’s.
When a person moves toward decision on the subject of strike off of LLP, many questions arises like
1) Whether Company have to complete Annual Fillings with ROC (E form LLP-8 and LLP-11) before filling application for Strike off of LLP?
As per rules, there is no provisions for exemption from the filing of e-form LLP- 8/ 11 for strike off of LLP. Therefore, every LLP have to complete annual filing before strike off of LLP.
2) Whether Company have to filed Initial LLP Agreement and any amendment in LLP Agreement (E form LLP-3) with ROC before filling application for Strike off of LLP?
LLP rules don’t provide any exemption from the filing of LLP agreement in e-form LLP 3 with ROC. Therefore, before filing of application for strike off it has to file LLP Agreement with ROC.
3) What are the ways to strike off the LLP?
An LLP can strike off its business by adopting any of the following two ways:
a) Declaring LLP as Non-functioning:
When LLP is not carrying the business for one or more years or it wants to close down its business, it can make an application to the registrar to declare the LLP as defunct and remove its name.
b) Winding up:
Voluntary winding up: When partners decides between themselves to wind up the business
Compulsory winding up: Upon failing to comply with some conditions the LLP may be compulsorily wound up by the tribunal.
The following procedure can be followed for closing a LLP by filing Form 24:
01) Cease Commercial Activity:
LLP Form 24 can be filed only by LLPs that never commenced business or have ceased commercial activity. Hence, if the LLP is operational and the promoters wish to close the LLP, the LLP must first cease all commercial activity.
02) Close Bank Account(s):
LLP Form 24 can be filed only by those LLP that have no creditors and no open bank account. Hence, prior to filing LLP Form 24, any bank account opened in the name of the LLP must be closed and a letter evidencing closure of the bank account in the name of the LLP must be obtained from the Bank.
03) Prepare Affidavits & Declaration:
All the Designated Partners of the LLP must first execute an affidavit, either jointly or severally, that the Limited Liability Partnership ceased to carry on commercial activity from (Date) or has not commenced business.
Further, the LLP Partners must also declare that the LLP has no liabilities and indemnify any liability that may arise even after striking off its name from the Register. The liability of the Partners would not be extinguished even after closure of a LLP while using Form LLP 24.
04) Prepare Documents:
Along with Form LLP 24 the income tax return of the LLP and LLP deed must be enclosed. In case the LLP has not filed any income tax return and it has not carried on any business activity, then it is not required. Else, a copy of the acknowledgement of the latest Income-tax return filed must be attached with the application for closing the LLP.
05) File Any Pending Documents:
After incorporation of a LLP, the LLP agreement must be filed with the MCA within 30 days of registration. In case this compliance was missed and LLP agreement was not filed, then the initial LLP agreement, if entered into and not filed, along with any amendments must be filed.
Also, any overdue returns in Form 8 and Form 11 up to the end of the financial year in which the limited liability partnership ceased to carry on its business or commercial operations must be filed before filing LLP Form 24. The date of cessation of commercial operation is the date from which the Limited Liability Partnership ceased to carry on its revenue generating business and the transactions such as receipt of money from debtors or payment of money to creditors, subsequent to such cessation will not form part of revenue generating business.
06) Obtain Chartered Accountant Certificate:
Once all the documents for filing of LLP Form 24 is prepared, a statement of accounts disclosing NIL assets and NIL liabilities, that is certified by a CA up to a date not earlier than thirty days of the date of filing of Form 24 must be obtained.
07) File LLP Form 24:
The above mentioned documents along with LLP Form 24 can be then filed with the MCA to strike off name of LLP. On processing the application, if found acceptable, the concerned Registrar of Companies would cause a notice to be published on the MCA website announcing the striking off of the LLP.