Winding Up Limited Liability Partnership
It is not easy to start a Limited Liability Partnership and run it. However, it is even harder to move on and close the Limited Liability partnership. However, there are certain circumstances that make it a necessity close such a business entity. The reasons to winding up Limited Liability Partnership can be either of the following:
- LLP is looking for a way to dissolve as it is not able to pay its debts
- The LLP has less than two partnership for more than 6 months
- LLP has committed some act that can be considered criminal
- The LLP has failed to file its financial statement for the past 5 years.
- The NCLT has ordered the LLP to shut down.
Any of the above circumstances can make it so that Strike of LLP is the only way. However, there can be other reasons as well.
Closing an LLP
There are two conditions under which you can close LLP in India, these are as follows:
- Voluntary Closing: This is the instance when you can choose to Close LLP in India. In this instance, the LLP has to get an order from the tribunal first before closing the company.
- Mandatory Closing: This is an instance where winding up limited liability partnership becomes mandatory as per the wishes of the court.
How to close a LLP in India?
As for the question of How to close an LLP in India, the procedure of it is as follows:
- The LLP passes the resolution for LLP winding up. This resolution has to be accepted by 3/4th of the partners.
- Within the next 30 days, the copy of this resolution is filed to the Registrar of LLPs
- The partners of the LLPs have to make a declaration that there are no pending liabilities of the Limited liability partnership. If there is a debt, then a declaration has to be made that it can be completed within a year of LLP closing commencement.
- An affidavit is submitted within the next 15 days.
- Consent of the trade creditors is taken to Strike off LLP.
- The notice of the board resolution is then advertised in a local and national newspaper for 14 days.
- A liquidator is appointed to create the reports of assets and liabilities of the LLP.
- Final accounts of LLP are submitted to the court along with prescribed form.
As you can already gather, there is not much difference in 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 legal assistance of our business experts.