Introduction:
How to close an LLP in India involves formally discontinuing the LLP and completing the applicable legal and regulatory requirements to remove it from the official records. An LLP that has stopped carrying on business may consider closure to avoid continuing statutory compliance and associated costs.
The closure process generally involves settling outstanding liabilities, completing pending compliances, closing the LLP’s bank account where applicable, preparing the required documents, and submitting an application for strike-off with the Ministry of Corporate Affairs (MCA). Understanding the LLP closure procedure, required documents, fees, and timeline can help designated partners complete the process smoothly and avoid unnecessary delays or compliance issues.
Legal Framework for LLP Closure in India:
The closure of an LLP is primarily governed by Section 75 of the Limited Liability Partnership Act, 2008, read with Rule 37 of the LLP Rules, 2009. These provisions provide the framework for striking off the name of a defunct LLP.
What Does Closing an LLP Mean?
LLP closure refers to the formal process of ending the business operations and legal existence of a Limited Liability Partnership. It involves completing the applicable legal and regulatory requirements, settling outstanding liabilities, completing pending compliances, and taking the necessary steps to bring the LLP’s affairs to an end. For an eligible inactive LLP, strike-off may be used to remove its name from the official register.
When Can an LLP Apply for Closure?
An LLP can apply for closure when:
- The LLP has not carried on business or operations for one year or more.
- The consent of all partners has been obtained.
- Applicable Form 8 and Form 11 filings and other required compliances have been completed.
- The LLP has no outstanding liabilities that would prevent the strike-off.
- Any bank account maintained by the LLP has been closed, where applicable, with appropriate evidence of closure.
- The required Statement of Account and other supporting documents have been prepared.
- There are no applicable restrictions preventing filing of Form 24.
When Can LLP Form 24 Be Rejected or Filing Be Restricted?
Form 24 filing may not be permitted in certain circumstances, including where:
- The LLP has open or unsatisfied charges.
- Another LLP form is pending for approval or payment of fees.
- A request for correction of LLP master data is pending.
- The LLP is marked as having a partner dispute.
- An inspection, investigation or prosecution is pending against the LLP.
Types of LLP Closures:
| Type | Description |
|---|---|
| Description | Suitable for an LLP that has stopped business and meets the prescribed conditions for removal of its name |
| Winding-Up | A formal process use to settle the LLP’s assets, liabilities, and other affairs before dissolution |
| Compulsory Winding-Up | Closure initiated through legal or regulatory proceedings when applicable under the law |
LLP Closure Procedure in India:
The LLP closure procedure involves completing the required formalities with the Ministry of Corporate Affairs to strike off the LLP from its records.
- Visit the official Ministry of Corporate Affairs (MCA) website to begin the LLP closure process.
- Log in to the MCA portal using valid credentials to access the applicable LLP filing services.
- From the MCA portal, select “MCA Services” and proceed to “E-Filing” to access the relevant LLP filing options.
- Navigate to “LLP Forms Download” to access the forms available for LLP-related filings.
- Select “Application for strike-off” to initiate the LLP strike-off application.
- Provide the required details of the LLP in the application, ensuring that the information matches the LLP's records with the MCA.
- Provide the required details of the LLP in the application, ensuring that the information matches the LLP's records with the MCA.
- Select the relevant LLPIN from the dropdown list, where applicable.
- Enter the required information and complete the LLP Form 24 application accurately.
- Save the webform as a draft, if required, so that the information can be reviewed before submission.
- Submit the completed webform after reviewing the information and confirming that the required details have been provided.
- An SRN (Service Request Number) is generated upon submission. The SRN can be used for tracking the application and future correspondence with the MCA.
- Affix the required Digital Signature Certificate (DSC) to the relevant document as prescribed for the filing.
- Upload the DSC-affixed PDF document on the MCA portal as part of the LLP strike-off filing.
- Pay the prescribed MCA filing fee applicable to the LLP closure application.
- After successful submission and payment, an acknowledgement is generated confirming receipt of the LLP closure application.
Documents Required for LLP Closure:
- LLP Form 24
- Consent of all partners
- Affidavit by designated partners
- Indemnity bond
- Statement of Account
- Bank account closure proof, where applicable
- Latest Income Tax Return acknowledgement, where applicable
- Details/declarations relating to liabilities and proceedings
Statement of Account: A statement showing the LLP's financial position, including its assets and liabilities, prepared and certified in the prescribed manner. Where applicable, the LLP should have nil assets and nil liabilities before proceeding with strike-off.
LLP Closure Fees in India:
The MCA filing fee for LLP closure is governed by the applicable MCA fee rules and may vary depending on the LLP and the form being filed. In addition to the statutory filing fee, applicants may incur professional fees, pending compliance costs, documentation charges, and other applicable expenses. The applicable MCA fee should be verified at the time of filing.
LLP Closure Timeline:
There is no fixed universal timeline for LLP strike-off. In practice, the process to close an LLP in India may take several months depending on pending compliances, document accuracy, MCA/ROC processing, queries and other circumstances. A 2 to 6 month period may be used only as an indicative estimate, not as an official MCA processing timeline.
Common Reasons for Delay in LLP Closure:
- Unfiled Form 8, Form 11, or other applicable LLP filings may need to be completed before closure.
- Unsettled loans, creditors, statutory dues, or other financial obligations can delay the closure process.
- Errors or inconsistencies in the application, affidavits, statements, or supporting documents may lead to queries or resubmission.
- Financial statements or statements of accounts required for the closure application may be incomplete or improperly prepared.
- Differences in partner details, DPIN information, or pending partner-related compliances can cause delays.
- Mistakes in the LLP's registered details, cessation date, or other information provided in the application may result in clarification requirements.
- The Registrar of Companies may raise queries or seek additional documents before processing the closure application.
- Ongoing proceedings, disputes, or unresolved regulatory matters involving the LLP may affect the closure process.
What Happens After an LLP Is Struck Off?
After an LLP is struck off, its name is removed from the register maintained by the Registrar, and its status is changed to "Strike off. The LLP can no longer conduct business in its name or undertake normal commercial activities. However, the closure does not automatically eliminate liabilities or obligations that arose before closure. Creditors, partners, or other affected parties may have legal remedies in certain circumstances. Relevant records should therefore be preserved even after closure.
Conclusion:
How to Close an LLP in India requires careful completion of the applicable legal, financial, and compliance requirements. For an inactive LLP with no outstanding liabilities, LLP strike-off can provide a relatively straightforward route to bring the entity to an end. Before filing, designated partners should ensure that pending compliances are completed, liabilities are settled, the required documents are prepared, and the prescribed application is filed correctly with the MCA.
Understanding the LLP closure procedure, documents, fees, and timeline can help avoid delays and unnecessary costs. Professional assistance can also help ensure that the closure process is completed accurately and in accordance with applicable requirements.
Frequently Asked Questions (FAQs)
LLP Form 24 is used to apply for striking off the name of an LLP from the register, subject to the applicable requirements.
Where the LLP has a bank account, it is generally advisable to close it and obtain appropriate proof of closure before submitting the strike-off application.
An LLP should generally settle its outstanding liabilities and obligations before applying for closure. Outstanding liabilities can affect eligibility and may result in objections or delays.
Yes. Applicable pending filings and statutory compliances should generally be completed before submitting the LLP closure application.
The LLP closure timeline can vary depending on the completeness of the application, pending compliance, document accuracy, and MCA processing. It may take several months in some cases.
Yes. An inactive LLP that satisfies the applicable requirements may generally apply for strike-off, subject to completion of the prescribed formalities.
After strike-off, the LLP's name is removed from the official register, and it can no longer operate as an active LLP. However, strike-off does not necessarily extinguish liabilities or claims arising before closure.