The easiest way to close a dissolved Limited Liability Partnership (LLP) with no assets or liabilities is to change its name. Designated partners are required to first settle the LLP’s accounts by paying off any liabilities and selling any assets. The Registrar will close the LLP on the basis of no assets or liabilities and no public objections. It is important to note that, unlike winding up, strike off is not the LLP’s legal end. While submitting a strike-off application, designated partners are required to submit an indemnity form for protection against future liabilities. Designated partners are personally liable for any future liabilities or obligations that arise, even if the company does not wind up. Therefore, it is always recommended to initiate all liabilities, disputes, etc. first. in order to protect oneself from upcoming debts.
Legal Provisions for Closing an LLP or Striking Off an LLP Rule 37 of the Limited Liability Rules of 2009 addresses the Striking Off of the Name of a Dissolved LLP. The term “defunct” refers to LLPs that are either inactive or inactive. As a result, in order to submit an application for closure, an LLP must have been inactive for at least one year. It states that “where a limited liability partnership is not carrying on any business or operation for a period of one year or more, such LLP can make an application to the Registrar, with the consent of all partners of the limited liability partnership, for striking off its name from the register.” This is one of the provisions of the statute. Following sub-Rule 1 of Rule 37, the Limited Liability Partnership (Amendment) Rules, 2017, added sub-Rule 1A as follows:
- i. Prior to filing Form 24, the LLP must file overdue returns on Forms 8 and 11 until the end of the fiscal year in which it ceased conducting business or commercial activities.
- ii. Attach the following to Form 24: (a) a statement of account signed by a Chartered Accountant in practice certifying that there are no assets or liabilities as of the date of filing;
- b) an affidavit signed jointly or separately by the designated partners stating that:i) The Limited Liability Partnership hasn’t started a business yet, or where it did, it stopped doing so on………..(dd/mm/yyyy); (ii) that the limited liability partnership does not have any obligations and that it will indemnify itself for any obligations that may remain even after its name is removed from the Register; iii) that the Limited Liability Partnership has not opened a bank account, and that if one had been opened, the account has since been closed, along with a certificate or statement from the bank confirming its closure; iv) If applicable, that the Limited Liability Partnership has not filed any income tax returns since its incorporation and has not conducted any business.
- c) a copy of the most recent tax return’s acknowledgement;
- d) a copy of the initial limited liability partnership agreement, if it was signed but not filed, and any modifications to it if the Limited Liability Partnership hasn’t started doing business since it was formed.
Documents necessary for LLP closure The following documents are necessary for LLP closure:
Detailed Application for Limited Liability Partnership (LLP) Closure;
Affidavit signed by each Partner, either alone or together;> All of the partners’ consent;> A Chartered Accountant-certified statement of accounts with no assets or liabilities that is at least 30 days old from the application’s filing date;
a copy of the most recent acknowledgment for the income tax return;> The initial LLP Agreement and, if applicable, any additional agreements. Procedure for Closing an LLP or Striking Off an LLP > Closing the LLP’s Bank Account> Sell any assets and settle any outstanding debts;> Get written permission from all partners to strike;> The preparation of all necessary documents for the LLP’s closure;
submitting form 24 to the Registrar.
After the LLP submits E-form 24 to the appropriate jurisdictional Registrar, it must wait for the Registrar’s approval to determine whether all documents attached to the forms are correct. For his satisfaction, the Registrar may request any additional documents. Once the Registrar is satisfied, he will publish the LLP’s name in the official gazette and ask for public objections. The LLP’s name will be removed from the register if there are no objections.