Limited Liability Partnership also abbreviated as LLP is a new form business introduced in LLP Act, 2008.Entrepreneur incorporates their business as LLP. Since, there are certain benefits enjoyed by an LLP like lesser compliance, audit exemption as compared with any other type of business entity. LLP having annual turnover below Rs.40 Lakh and capital contribution is less than Rs 25 Lakh. Here are some points written that why Limited Liability Partnership need to be wind up.
Following are the reasons for Winding up of LLP that can be initiated by a Tribunal.
- There are conditions in which LLP wants to be wound up.
- LLP is not in a position to pay its debts.
- LLP has become bankrupt.
- LLP has less than two Partners for a period of more than 6 months or LLP has become bankrupt.
- LLP has hurt sovereignty and integrity of India, by security of state or public order.
- LLP has not filed with the Registrar Statement of Accounts and Solvency or LLP Annual Returns for any five consecutive financial years.
Closing up of LLP Procedure
To start the procedure for ending up of LLP, a determination for ending up of LLP must be passed and recorded with the Registrar inside 30 days of going of the determination. On the date of going of determination of ending up of LLP, the deliberate twisting up might be esteemed to start.
Once, the determination for ending up of Limited Liability Partnership is recorded with the Registrar, the lion's share of Partners (at least two) might make a revelation checked by an Affidavit such that the LLP has no obligation or that it will be in a position to pony up all required funds inside a period, as specified in the affirmation, however not surpassing one year from the date of beginning of ending up of LLP. Alongside the Affidavit marked by the lion's share Partners; the accompanying records must be documented with the Registrar inside 15 days of going of the determination for ending up of LLP:
- Statement of advantages and liabilities for the period from last records conclusion to date of ending up of LLP confirmed by no less than two Partners
- Report of valuation of the benefits of the LLP arranged by a value, if there are any advantages in the LLP.
Steps to Close a LLP in India
Step 1 - Pass a Resolution once you have decided to close on LLP and it should be passed by 3/4th of the partners.
Step 2 -After the passing a resolution you have to fill Form-1 with the resolution copy within the 30 days.
Step 3 -Declaration of the Debt or if have any then it will be have sufficient amount. They can be paid within the 1 year from the commencement of the winding-up. It needs to be prepared according to the majority of the partners (minimum 2).
Step 4 - Form 4 & Value of the Assets with affidavit has to be submitted to the registrar within 15 days of the resolution along with the forms.
Step 5 - Obtain consent from the Creditors given by at least 2/3 of the unpaid creditors.
Step 6 - Filings and Appointment of Liquidator
Step 7 - Finalization of the Accounts of LLP and submit along with the form 9. So once form 9 has been filed, all the formalities have been completed.
Closing of LLP with Creditors
On the off chance that a LLP under twisting up has any secured or unsecured leasers, at that point before making any move for ending up of LLP, the endorsement for ending up of LLP must be asked for from the lenders. Lenders are required to give their conclusion on ending up of LLP inside 30 days of receipt of demand for endorsement for twisting up. In the event that it is in light of a legitimate concern for all accomplices and all banks that the LLP be ended up, at that point the LLP can continue with deliberate twisting up system.
Arrangement of LLP Liquidator
A LLP Liquidator must be delegated inside thirty days of going of determination of ending up through a determination. In the event that there are any lenders, at that point the arrangement of LLP Liquidator should be substantial just in the event that it is endorsed by 66% of the loan bosses in estimation of the LLP.
It is then the obligation of the LLP Liquidator to play out the capacities and obligations for ending up of LLP. The LLP Liquidator would settle the loan bosses and alter the privileges of the accomplices, all things considered. While releasing his obligations, the LLP Liquidator is required to keep up appropriate books of records relating to the ending up of the LLP.
Recording of Winding up Report by LLP Liquidator
Once, the undertakings of the LLP is completely twisted up, the LLP Liquidator would set up a report expressing the way in which the ending up of LLP has been directed and property of the LLP has been arranged off. On the off chance that 66% of the quantity of Partners and Creditors in esteem are happy with the twisting up report arranged by the LLP Liquidator, at that point a determination for ending up of records and clarification for disintegration must be passed by the Partners.
The LLP Liquidator should then send the LLP twisting up report alongside the determination to the Registrar and document an application with the Tribunal.
Disintegration of the LLP
On the off chance that the Tribunal is happy with the process followed closing up of the LLP, at that point, all things considered, the Tribunal would pass a request that the LLP should stand broke down. The LLP Liquidator is required to document the duplicate of the request from the Tribunal with the Registrar for ending up of LLP. The Registrar on accepting the duplicate of the request goes by the Tribunal for ending up of LLP would distribute a notice in the Official Gazette that the LLP stands broke down.