INTRODUCTION

Limited Liability Partnership is the nature of the entity that combines features of both partnership and Limited Liability Company since it is formed with at least two partners who come together with the motive to earn profits and their liability is limited to the extent of their contribution.  It is another type of corporate body form to traditional partnership firms having the characteristic of perpetual succession. However, the Partnership Act, 1932 and the provisions of Companies Act, 2013 save as otherwise provided doesn’t apply to Limited Liability Partnership. Limited Liability Partnership Act, 2008 along with Limited Liability Partnership Rules, 2009 (amended from time to time) regulates the formation and liquidation of Limited Liability Partnerships. Lately, in August 2021, the Government has amended some provisions of the Limited Liability Partnership Act, 2008 to promote ease of doing business through the formation of LLPs by decriminalizing various offences provided in the Act, establishment of special courts for fast trial of offences, made corrections to avoid confliction with other relevant laws and insertion of a new definition for small limited liability partnerships.

Section 75 of Limited Liability Partnership Act, 2008 and Rule 37(1)(b) of Limited Liability Partnership Rules, 2009 governs the provisions relating to strike off the name of an LLP from the register of Limited Liability Partnerships.

CONDITIONS PRECEDENT

Before making an application for striking off the name of an LLP to the Registrar, the following essential conditions need to be met:

• LLP should not carry on the business for at least one year.

• Consent of all the partners and creditors is required to be obtained for striking off the name of LLP from the register.

• It has filed its annual returns in E-Form 8 & 11 up to the period in which it ceased to carry on its business or commercial operations.

• Statement of accounts of LLP should depict NIL Assets and Liabilities as on the date of considering the matter of striking off.

• LLP has not opened any Bank Account or closed its account before considering the matter of striking off.

• LLP has filed its due Income Tax Returns if it has carried any business or operations.

• LLP has discharged its all liabilities and made sufficient provisions for discharging future liabilities.

• No Litigation is pending against LLP.

• All the statutory dues are cleared.

COURSE OF ACTION FOR FAST TRACK CLOSURE OF LLP

STEP1: -

Check that the LLP is not carrying on any business or operations for at least one year.

STEP2: -

Obtain Consent of all partners for making an application to the Registrar for striking off the LLP.

STEP3: -

Secure NOC from the creditors of LLP.

STEP3: -

Designated Partners authorize any one of them to make an application to the Registrar in E-Form 24 in their duly convened meeting.

STEP4: -

Download and File Form-24 on MCA portal mentioning the reasons for making an application along with the following attachments: -

1. Consent of all the partners for striking off the name of LLP from the Register

2. Statement of accounts certified by Chartered Accountant in Practice depicting NIL Assets and Liabilities made up to date not earlier than 30 days of the date of filing of an application.

3. An affidavit by each designated partner duly notarized, stamped, and signed, either jointly or severally to the effect that LLP has not commenced its business or where it commenced the business, it ceased to carry on such business, that it has no assets and liabilities, that it has not opened any Bank Account and where it had opened, the same has been closed and it has not filed any Income Tax Return where it has not carried on any business.

4. Latest Income Tax Return acknowledgment in ITR-V Form in case the Company has carried out any business and filed such return.

5. Original LLP Agreement, if entered by the partners but not filed along with changes made if any, in case of non-commencement of business by LLP since its incorporation.

6. Indemnity Bond by Designated Partners duly notarized, stamped, witnessed, and signed that LLP is not intended to do any business or commercial activity in future and undertakes to pay and settle all lawful claims arising in future even after striking off the name of LLP, to indemnify any person for any such loss that may arise.

7. Copy of Authority Letter on letterhead of LLP for authorizing any designated partner to make an application to Registrar on behalf of LLP.

8. Copy of application for Closure of LLP by an authorized designated partner.

9. Copy of Self-Attested Identity Proofs of all partners.

10. Affix Digital Signature of authorized Designated Partner in Form 24.

11. Pay Filing Fees of Rs. 500/-

STEP5: -

The contents of the application made by LLP shall be placed on the website of the Ministry of Corporate Affairs for one month to intimate the general public for sending their representations to the Registrar and LLP.

STEP6: -

After the expiry of one month as stated above,  the Registrar unless the contrary is shown and after satisfying that all the requirements are complied with, and in case, the Registrar has sufficient cause to believe that LLP has any asset or liability then satisfy himself that sufficient provision has been made for the realization of all amount due to LLP and for the discharge of its liabilities within a reasonable time and where it requires, obtain necessary undertakings from the designated partners, will pass an order of removal of an LLP from the register of members.

POWER OF TRIBUNAL TO WIND UP AN LLP EVEN IF ITS NAME HAS BEEN STRUCK OFF BY REGISTRAR FROM THE REGISTER OF LLPs

If on the application of any person who is aggrieved by the order of striking off by Registrar or Suo Motu, NCLT is of the view that it is necessary to put the LLP at the same place as it had never been struck off for securing the interest of any person that has not been secured earlier by issuing an order of winding up.

Conclusion: -

Hence, to get the name of LLP removed from the register, some prerequisite conditions are required to be fulfilled and at least one year shall be lapsed from the date of incorporation before filing an application.

SOME FAQS ON FAST TRACK CLOSURE OF LIMITED LIABILITY PARTNERSHIPS (LLPs)

Q 1: - Can LLP apply for striking off its name before one year of its incorporation?

No, an application cannot be moved for striking off if one year has not been expired from the date of incorporation.

Q2: - If the LLP has not filed its overdue return, then can it make an application to Registrar for removal of its name?

There are two situations in that case: -

1) If the LLP has not carried on its business or operations since its incorporation then filing of return is not mandatory

2) If LLP has carried on its business or operations then it needs to file its return for the period in which it ceased to carry its business or operations.

Q3: - Is it mandatory to attach the latest acknowledgment of income-tax return in Form 24?

Yes, if LLP has carried on its business or operations and filed such a return.

Q4: - Is UDIN mandatory to be generated for statements of accounts showing NIL assets and liabilities?

Yes, it is necessary to generate UDIN for statements of accounts.

Q5: - How older can be the statement of accounts disclosing NIL assets and Liabilities?

Statement of accounts depicting NIL assets and Liabilities should be made up to a date not earlier than 30 days of the date of Filing of Form 24.

HOW CAN COMPLIANCE CALENDAR HELP?

We at Compliance Calendar enable a smooth striking off of an LLP after evaluating various factors that need to be considered before initiating the process of striking off and try to cover every legal aspect before submitting an application for removal of the name of LLP so that it is to be accepted by Registrar within a reasonable time without objecting the same. If you have any questions, you are requested to send an email to info@ccoffice.in or WhatsApp/Call at 9988424211