LLP Winding Up
A LLP winding up can be initiated voluntarily or by striking off or by a Tribunal. If a LLP is to initiate winding up voluntarily, then the LLP must pass a resolution to wind up the LLP with approval of at least three-fourths of the total number of Partners. If the LLP has lender's, secured or unsecured, then the approval of the lenders would also be required for winding up of the LLP.
To begin the process for winding up of LLP, a resolution for winding up of LLP must be passed and filed with the Registrar within 30 days of passing of the resolution. On the date of passing of resolution of winding up of LLP, the voluntary winding up shall be deemed to commence. India Filings can help you wind up your LLP quickly and easily.
- Voluntary Winding Up
LLPs can also be wound-up easily with the approval of 3/4th of the partners. To start the liquidation process for a LLP, a greater part of the designated partners, will have to make a declaration that the LLP has no debt or that it will be competent to pay the debts in full within a period of not more than 1 year from the start of winding up. Further, the LLP partners must declare that the LLP is not being wound up to defraud any person or persons. This declaration for winding up of the LLP must be prepared along with a statement of assets and liabilities until the most recent practicable date right before the making of declaration for winding up. A valuation of the assets related to the LLP prepared by a valued must also be submitted, if there are assets in LLP. Voluntary winding up will be deemed to start on the date of passing of resolution for the reason of voluntary winding up.
- Striking Off
The Ministry of Corporate Affairs has recently amended Limited Liability Partnership Rules, 2009 by introducing the Limited Liability Partnership (Amendment) Rules, 2017 with effect from 20th May, 2017. With this amendment, LLP Form 24 has been introduced by the MCA and it is now possible to easily close a LLP by making an application to the Registrar for striking off name of LLP. Before the introduction of the Limited Liability Partnership (Amendment) Rules, 2017, the procedure for winding up a LLP used to be long and cumbersome. However, with the introduction of LLP Form 24, the procedure has been made easy and simple
- Winding Up by Tribunal
Winding up of LLP can be initiated by a Tribunal for the following reasons:
- The LLP wants to be wound up.
- There are less than two Partners in the LLP for a period of more than 6 months.
- The LLP is not in a position to pay its debts.
- The LLP has acted against the interests of the sovereignty and integrity of India, the security of State or public order.
- The LLP has not filed with the Registrar Statement of Accounts and Solvency or LLP Annual Returns for any five consecutive financial years.
- The Tribunal is of the opinion that it is just and equitable that the LLP should be wound up.
Reasons Behind Winding Up an LLP
There are many reasons behind winding up an LLP.
- No Profitability.
- Idle Business Activities.
- Voluntary Winding Up.
- Completion of any kind of Project.
- Death of a Partner.
Documents Required to Close an LLP in India
These are the required documents which are mandatory to close an LLP in India:
- PAN Card
- LLP Agreement along with any modifications made therein.
- Address Proof of Firm.
- Accounting Information.
- NOC From Creditors.
- Statement of assets and liabilities of the LLP certified as true and correct by auditor/ chartered accountant in practice.
Stepwise Procedure for Closure of LLP in India
These are the stepwise procedure for the closing of an LLP in India:
- Closure of Bank Account.
- Prepare a Statement of Accounts.
- Partners Meeting and Consent.
- Drafting of Affidavit and Indemnity Bond.
- Digital Signature of at least one designated partner.
- Application filing for the closure of LLP.