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Closing a Limited Liability Partnership (LLP) involves a formal legal process called “winding up.” It can occur either voluntarily by the partners or mandatorily by the Registrar of Companies (RoC) under certain circumstances. The voluntary closure of an LLP usually happens when the partners agree that the LLP is no longer viable or necessary, while a compulsory closure may be initiated due to non-compliance with statutory regulations.
To formally close an LLP, the partners must settle all liabilities, distribute assets, and file necessary forms with the RoC. The process ends with the LLP being struck off from the records of the RoC, officially dissolving the entity.
The process of closing an LLP requires submitting key documents, such as a statement of accounts and an affidavit declaring no pending dues. All partners must agree to the closure, and the LLP must not have been involved in any business activities for at least one year prior to winding up. Once the RoC approves the application, the LLP is officially dissolved, and its legal existence ceases.
No Pending Liabilities
The LLP must settle all outstanding debts and liabilities before initiating the closure process.
Inactive Business Operations
The LLP should not have conducted any business or commercial activities for at least one year prior to applying for closure.
Unanimous Agreement by Partners
Partners may agree to redistribute profits or losses differently, which must be reflected in the agreement.
Filing of Required Forms
The LLP must submit necessary forms, including a statement of accounts and affidavits, to the Registrar of Companies (RoC) for approval.
Settle All Liabilities
Ensure all debts and obligations of the LLP are fully settled before proceeding with the closure.
Consent of Partners
Obtain unanimous consent from all partners to voluntarily close the LLP.
No Business Activity
Verify that the LLP has not been involved in any business activities for at least one year.
Prepare Statement of Accounts
Prepare the latest financial statement showing no pending liabilities or obligations.
Submit Affidavit of No Pending Dues
Partners must file an affidavit declaring that all dues have been paid, and no debts remain.
File Form 24
Submit Form 24 to the Registrar of Companies (RoC) to initiate the strike-off process.
File Indemnity Bond
An indemnity bond must be filed by the designated partners, agreeing to settle any unforeseen liabilities.
Notify Creditors
Ensure all creditors, if any, have been notified of the LLP’s intention to close.
ROC Approval
Await approval from the RoC to officially close the LLP.
Strike Off from Register
Once the RoC approves, the LLP will be struck off from the register, and its legal existence will cease.
Ensure unanimous approval from all the partners to initiate the closure of the LLP.
Draft a statement of accounts up to a date not older than 30 days from the application date, showing no liabilities.
Submit Form 24 to the Registrar of Companies (RoC), which is the official application for striking off the LLP.
Partners must file an affidavit confirming that there are no pending liabilities and an indemnity bond agreeing to pay any future claims.
Ensure the LLP has not been involved in any business or commercial activities for at least one year prior to the closure.
Ensure that all bank accounts of the LLP are closed, and any balances settled.
Once Form 24 is filed, the RoC will review the documents and approve the strike-off if all conditions are met.
After approval, the LLP’s name is struck off the register, and the LLP is officially dissolved.
Consent of Partners:-
A unanimous consent letter from all the partners agreeing to close the LLP.
Affidavit:-
An affidavit from each partner stating that the LLP has no liabilities and confirming that they agree to the dissolution.
Indemnity Bond:-
A signed indemnity bond by the partners, ensuring that they will pay off any liabilities that may arise even after the LLP has been struck off.
Statement of Assets and Liabilities:-
A financial statement prepared up to a date not older than 30 days prior to the application, showing that the LLP has no assets and liabilities.
Closure of Bank Accounts Proof:-
Proof that the LLP’s bank accounts have been closed, with a bank statement showing a zero balance.
Income Tax Returns:-
A copy of the LLP’s latest income tax return, along with a No Objection Certificate (NOC) from the tax authorities, if applicable.
Application for Strike Off (Form 24):-
The formal application to the Registrar of Companies (RoC) requesting the strike-off of the LLP.
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Closing a Limited Liability Partnership (LLP)
An LLP can be closed voluntarily by the partners or through the process of striking off by the Registrar if the LLP has been inactive for a certain period.
The closure process typically takes 3-6 months, depending on how quickly the necessary documents are submitted and approved by the Registrar of Companies (ROC).
Key documents include a statement of accounts, a resolution from partners, consent of the creditors (if any), an affidavit by the partners, and indemnity bonds.
Yes, all designated partners must pass a resolution for the voluntary winding-up of the LLP, indicating their unanimous consent.
Yes, all outstanding liabilities, including debts and obligations, must be settled before the LLP can be officially closed.
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