How To Close Your Limited Liability Partnership?
A Limited Liability Partnership (LLP) is a partnership (usually in business) in which all members (partners) have limited obligations. In general, an LLP is formed through the use of legal phrases and paperwork. There is a specific method for registering your LLP. People are sometimes perplexed as to how to get your LLP registered; however, most of them are unaware that there is a set procedure for closing an LLP.
When it comes to LLP registration or closure, Finaxis is a well-known firm. To dispel such myths, a procedure for closing an LLP in India is described below.
To Be Eligible For Closure, You Must Meet The Following Requirements
- The LLP should be inactive for at least one year, or it should be inoperative from the date of formation.
- The to-be-closed LLP has not conducted any business in the last year.
- Another requirement is that the LLP has no assets or debts/liabilities on the date of application.
- Also, there is a substantial amount of paperwork that must be completed. The first step is to apply, along with the requisite fees and documents, as well as approval from all LLP partners.
- However, to close an LLP, you must submit an IT return as well as a Statement of Accounts (for the previous 30 days) from the date of application.
- At this point, you should be aware that the closure of an LLP can take up to two months if the partners are quick to complete the necessary formalities.
In India, How Do You Close An LLP?
Step 1: Resolution
A special resolution agreeing to dissolve the partnership must be passed by all or ¾’th of the company’s partners.
Step 2: Form No. 1
Form No. 1 is filed with the Ministry of Corporate Affairs (MCA) with a copy of the resolution within 30 days of the resolution being passed.
Step 3: No Debt Declaration
At least two LLP members must declare that the LLP has no debts or liabilities. Or, if it occurs, it will be settled within one year of the start of the winding-up process.
Step 4: Form 4 & Asset Value
Form No. 4 must be presented to the registrar within 15 days of filing the forms, along with a report on the worth of the LLP’s assets and a statement certifying that the LLP is not being closed to defraud anyone.
Step 5: Obtaining Creditor Consent
The next stage is to obtain permission from the LLP’s creditors to wind up the business. At least two-thirds of the company’s creditors must agree to this.
Step 6 – Submit Form 6
An advertisement in the local newspaper must be placed within 14 days of gaining authorization from creditors. If the LLP has assets or obligations, a liquidator is appointed, and his or her statement must be filed using Form 6.
Step 7: Submit Form 9
Prepare and send the LLP’s final account statement, along with form 9, to complete all requirements.
Finaxis Procedure For Winding Up LLP:
Form 24 will be filed with the Registrar of Companies, along with the partners’ declaration. You must also provide indemnity bonds and an affidavit indicating that the information is correct to the best of the partner’s knowledge.
For one month, the Registrar of Companies will post a notice on its website outlining the substance of the application.
Removal Of LLPs Name:
After one month, the Registrar of Companies will remove the LLP’s name from the register and publish a notification in the Official Gazette, effectively closing/dissolving the LLP legally.
Documents Required For Closing An LLP
To close an LLP, the partners and designated partners must submit the following documents:
Partners’ PAN Card-
Aside from the application form and indemnification that must be presented to the registrar, you must also produce PAN cards for all of the LLP’s partners and designated partners to close the LLP.
Partners’ Aadhaar Card-
Similar to the PAN card, another document required for LLP closure is the Aadhaar card of all LLP partners and authorized partners.
Latest Address Proof Of Partners-
In addition to the above-mentioned two documents, the most recent address proof of all LLP partners must be supplied.
To close an LLP, you must get consent letters signed by all partners and submit them along with the form and fees.
What Is the Procedure For Closing A Defunct LLP?
If you want to close the Defunct LLP, you must complete the steps outlined below:
Closure Of Current Business Operations-
If you intend to close the LLP, you must first close the current business operations.
Close The Bank Account-
Once your business has ceased operations, you should close the bank account.
Preparing The Closing Statement Of Accounts-
The final step is to prepare the closing statement of accounts.
Application To ROC-LLP Form 24-
At this step, the LLP partners must file an application to the registrar along with an affidavit, fees, and the consent of all partners.
If you are uncertain about the stages and process of closing an LLP, you can contact Finaxis for advice. We have a team of qualified professionals who can assist you with this.
The MCA (Ministry of Corporate Affairs)has issued new rules for winding up businesses. These new rules will go into effect on April 1, 2020. They aim to make the closing procedure easier for smaller businesses. However, these rules will only apply to certain types of organizations as defined in the Companies Act of 2013.
How Would You Close An LLP Company with an Online Process?
To close your Limited Liability Partnership, file Form 24 with the ROC, along with the declaration, indemnity bonds, and affidavits from all partners.
‘Finaxis’ assists you with closing your LLP in three simple steps –
Click here to get in touch with us about closing an LLP.