Declaring the LLP as Defunct
In case the 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.
The procedure is given below
1. File all overdue returns i.e. form 8 and form 11, if any up to end of the financial year in which LLP ceased to carry on its business or commercial operation.
2. Obtain consent of all partners of LLP
3. Authorizing one partner to make application to Registrar
4. An application is required to be made in eForm 24 to the Registrar of Companies for Striking off the name of the LLP under clause (b) of sub rule 1 of Rule 37 of LLP Rules 2008 with the consent of all partners.
5. Application filed also to be supported by
(i). Indemnity Bonds to indemnify any person legally claiming after the LLP to be striked off and duly sworn Affidavits declaring all the information provided and statements given to be true, from all partners.
(ii). Approvals or No Objection Certificates from concerned Regulatory Authorities with which the LLP is registered. For e.g. LLP engaged in or registered with RBI for Banking Business has to obtain NOC from RBI before winding up of its affairs.
(iii). Consent of all partners.
(iv). Copy of authority to make application duly signed by all partners.
(v). Application filed also to be supported by a statement of account disclosing nil assets and nil liabilities, certified by a Chartered Accountant in practice made up to a date not earlier than thirty days of the date of filing of Form 24.
(vi). An affidavit signed by the designated partners, either jointly or severally.
(vii). Copy of acknowledgement of the latest Income Tax Returns.
(viii). Copy of Initial LLP Agreement.
6. The Registrar shall publish a notice on its website as to the content of the application for a period of one month for the notice of the general public.
7. The Registrar, where he has sufficient cause to believe that the limited liability partnership has any asset or liability, satisfy himself that sufficient provision has been made for the realization of all amount due to the limited liability partnership and for the payment or discharge of its liabilities and obligations by the limited liability partnership within a reasonable time and, if necessary, obtain necessary undertakings from the designated partner or partner or other persons in charge of the management of the limited liability partnership.
8. On the expiry of period of one month, the Registrar may, by an order, unless cause to the contrary is shown by the limited liability partnership, strike its name off the register, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the limited liability partnership shall stand dissolved.
Guidelines
There should have been no liability existing or obligation subsisted on part of LLP and its partners.
There should be no litigation pending for or against LLP.
The assets of the limited liability partnership shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the limited liability partnership from the register
Liability of the Designated Partners subsists even after dissolution of LLP for payment of any legal dues to its creditors and other persons as if the LLP has not been dissolved.
Declaring the LLP as defunct is much easier process to close down the LLP as compared to wounding up because it does not involves high formalities and due to simplified procedure, the time consumed is comparatively very less.
Winding up of LLP
Winding up is process, where all the assets of the business are disposed off to meet the liabilities of the same and surplus any, is distributed among the owners. The LLP Act 2008 provides for following two modes for winding up the LLP i.e.:
Voluntary winding up-
Compulsory winding up
Voluntary Winding up: Under this, the partners may between themselves decide to stop and wound up the operations of the LLP. The voluntary winding up of LLP will be governed by Insolvency and Bankruptcy Code, 2016 and rules thereunder.
Compulsory winding up: A limited liability partnership may be compulsorily wound up by the Tribunal,-
if the limited liability partnership decides that limited liability partnership be wound up by the Tribunal;
if, for a period of more than six months, the number of partners of the limited liability partnership is reduced below two;
if the limited liability partnership has acted against the interests of the sovereignty and integrity of India, the security of the State or public order;
if the limited liability partnership has made a default in filing with the Registrar the Statement of Account and Solvency or annual return for any five consecutive financial years; or
if the Tribunal is of the opinion that it is just and equitable that the limited liability partnership be wound up.
The Ministry of Corporate Affairs has issued the draft rules in respect of the procedure to be followed for winding up of the LLP but the same has not been notified yet.