Closing an LLP in India

LLP Registration in India (LLP)

Registering an LLP is the process of incorporating a Limited Liability Partnership, a business entity governed under the Limited Liability Partnership Act of 2008. An LLP requires a minimum of two partners for its incorporation in India. Therefore, if you intend to do your business safely, you must protect your personal assets. However, if you choose the traditional limited company to keep your assets away from your business, you lose the aspects of a Partnership Firm. So, is there a way to retain the benefits of a limited company while existing as a partnership firm? Yes, there is.

What is a Limited Liability Partnership?

Let us explain the limited liability partnership to you.

A Limited Liability Partnership is a form of business entity that is seen as a partnership. However, it does have the limited liability perk protecting the assets of the LLP owners. Introduced by the Limited Liability Partnership act of 2008, it is the most popular form of business infrastructure after a company. To establish it, you need to go through LLP registration in India.

Being Limited Liable is not the only way an LLP differs from a partnership. In a partnership firm, if one partner does something wrong, both partners are held accountable. However, one of the major benefits of LLP registration in India is that one partner's misconduct will not affect the other partner.

Features of a Limited Liability Partnership

The other features of LLP are as follows:

• It is a separate legal entity from its members
• Members have access to limited liability
• An LLP is more flexible than a partnership
• A Limited Liability Partnership Agreement is created and signed by the partners beforehand before the business is started
• It requires at least two designated members
• It comes under the Limited Liability Partnership Act of 2008

Winding Up Limited Liability Partnership

It is not easy to start a Limited Liability Partnership and run it. However, moving on and closing the Limited Liability Partnership is even harder.  Also, certain circumstances make it necessary to close such a business entity.

Why would one strike off an LLP in India?

The reasons for winding up a Limited Liability Partnership can be either of the following:

1. LLP is looking for a way to dissolve as it is not able to pay its debts
2. The LLP has had less than two partnerships for more than 6 months
3. LLP has committed some acts that can be considered criminal
4. The LLP has failed to file its financial statement for the past 5 years.
5. The NCLT has ordered the LLP to shut down.

Any above circumstances can make it so that a Strike of LLP is the only way. However, there can be other reasons as well.

Registrationwala provides thorough services during this difficult transition of Closing an LLP in India. 

Eligibility Criteria for Closing an LLP in India

There are two conditions under which you can close LLP in India, and these are as follows:

Voluntary Closing

This is the instance when you can choose to Close LLP in India. In this instance, the LLP must get an order from the tribunal before closing the company.

Mandatory Closing

This is an instance where winding up a Limited Liability Partnership becomes mandatory per the court's wishes. 

Documents Required for filing Closing an LLP in India

The following documents are to be submitted to close an LLP.

• Application to remove LLP
• Board resolution to remove LLP
• Consent of the Designated Partners
• Consent of the Partners
• Consent of the creditors
• Statement of Assets and Liabilities
• Certification that no compliance remains to be filed

Process for filing Closing an LLP in India

As for the question of How to close an LLP in India, the procedure of it is as follows:

Board Resolution

The LLP passes the resolution for LLP winding up. This resolution has to be accepted by 3/4th of the partners.

Resolution filing to the Registrar

Within the next 30 days, a copy of this resolution is filed to the Registrar of LLPs

Liability(s) Declaration

The LLPs' partners have to declare that there are no pending liabilities of the Limited liability partnership. If there is a debt, a declaration must be made that it can be completed within a year of LLP closing commencement. An affidavit should be submitted within the next 15 days.

Consent of the Creditors

Consent of the trade creditors is taken to Strike off LLP.

Resolution Notice Publication

The notice of the board resolution is then advertised in a local and national newspaper for 14 days.

Liquidator Appointment

A liquidator is appointed to create the reports of assets and liabilities of the LLP.

Final Accounts Submission

Final accounts of LLP are submitted to the court along with the prescribed form.

As you can already gather, there is not much difference between the procedure to close LLP in India and the procedure to wind up a company in India.

However, there are legal requirements that must be met. Therefore, you need the legal assistance of our business experts.

Our Assistance in filing the closing of an LLP in India

We at Registrationwala provide end-to-end solutions for filing and closing an LLP. Our services include:

1. Collection of information and starting the process
2. Creating the first compliance draft
3. Reviewing the draft and making changes if necessary
4. Providing you with the confirmation receipt

Registrationwala provides thorough services during this difficult transition of Closing an LLP in India.