Closure of LLP with Bizhub
LLP stands for Limited Liability Partnership, which combines the advantages of a corporation with the flexibility of a partnership.
Before we understand LLP Strike off, let us have a brief idea on LLP (Limited Liability Partnership
LLP stands for Limited Liability Partnership, which combines the advantages of a corporation with the flexibility of a partnership. Regardless of changes in partners, the LLP can continue to exist. It has the ability to make contracts and hold property in its name.
The LLP is a separate legal entity with full liability for its assets, but the partners’ liability is limited to their agreed-upon contribution to the LLP.
LLP Strike Off:
If an LLP wants to close down its business or if it has not carried on any business operations for a year or more, it can apply to the Registrar to have the LLP declared defunct and the name of the LLP removed from its register of LLPs.
LLPs are newly formed business entities in India, as a result of the LLP Act of 2018. If the annual turnover of the LLP is less than Rs40 lakh or the capital contribution is less than Rs.25 lakhs, the LLP is exempt from audit.
The Limited Liability Partnership (LLP) is a basic partnership in which all partners have limited liability due to the LLP’s legal terms and documentation. An individual must follow a specific procedure to register his or her limited liability partnership (LLP). While there are benefits to forming an LLP in India, there are also some drawbacks.Many of them are also unfamiliar with the procedure for dissolving an LLP. We’ll look at how to dissolve an LLP in India in this article.
The process of winding up an LLP is governed by sections 63, 64, and 65 of the LLP Act, 2008. The winding-up of a Limited Liability Partnership can be done voluntarily or by a tribunal. Let’s take a closer look at both.
Winding up of an LLP by the tribunal
A tribunal initiates the LLP’s winding-up for the following reasons:
An LLP’s voluntary dissolution
With the approval of 3/4th of the partners, the LLP winding-up process can be started quickly. To begin the LLP liquidation process, the designated partners must declare that the LLP has no debts or that the LLP will pay all debts in full within one year of the LLP’s dissolution.
In addition, the LLP partners must declare that the LLP is not being wound up as a result of any fraud. Before making the declaration for the winding up of the LLPs, this statement of the declaration must be prepared along with the statement of assets and liabilities up to the most recent practicable date.
In the event that the LLP has any assets, a valuation of those assets should be prepared and submitted. The voluntary winding up of the LLP will take effect from the date on which the resolution for the voluntary winding up of the LLP is passed.
Procedure to Windup LLP
How Do I Close My Limited Liability Partnership (LLP)?
To begin the process of winding up an LLP, a resolution to wind up the LLP must be passed and filed with the registrar within 30 days of the resolution being passed. The voluntary winding up of the LLP shall be deemed to begin on the date that the LLP’s winding-up resolution is passed.
After the LLP’s resolution for winding up is filed with the registrar, the majority of Partners must sign a declaration, which must be supported by an affidavit, stating that the LLP has no debts or that it will be able to pay all debts within the time period specified in the declaration.(This period should not exceed one year from the date the LLP’s winding up process began.)
Within 15 days of passing the resolution to wind up an LLP, the following documents should be filed with the registrar, along with the affidavit signed by the majority of the Partners:
- The statement of the assets and liabilities for the period from the last two accounts closure to date of winding up of LLP attested by at least two partners
- Report of the valuation of the assets of the LLP prepared by the valuer if there are any.
Winding up with the Creditors
The majority of the partners must file Form 2 stating that they have no outstanding debts or that they will pay them within a specified period of time, but not more than a year from the date of passing the resolution for the purpose of winding up the partnership.
Publication Of Resolution
The LLP is now required to publish an advertisement regarding the resolution of the winding up in a newspaper that is circulated in the territory where the registered office is located or where the LLP’s office is registered within 14 days after passing the resolution of winding up and receiving consent from the creditors for winding up.
Appointment of the LLP Liquidator
A voluntary liquidator as the LLP liquidator is appointed with fixed remuneration after the approval of a majority of the partners is obtained through the resolution. Only after the approval of two-thirds of the creditors in the LLP’s value will the liquidator be appointed. The creditors can also appoint an LLP liquidator, and in the event of an immediate appointment by the creditors and the partners, the LLP liquidator chosen by the creditors will take effect. The tribunal will appoint an LLP liquidator if the liquidator is acting.
Filing of winding up by a Liquidator
After the LLP’s affairs have been fully wound up, the LLP liquidator must prepare a report detailing how the LLP’s affairs were wound up and how the LLP’s property was disposed of. If two-thirds of the number of partners and creditors in value are satisfied with the LLP liquidator’s report, the partners must pass a resolution winding up the accounts and explaining the dissolution. The LLP liquidator must then send the LLP winding up report to the Registrar, along with the resolution, and file an application with the tribunal.
The LLP liquidator will issue a report as soon as the LLP’s affairs are completed. Discharging the LLPs’ liabilities means that the LLPs’ liabilities have been discharged, the assets have been liquidated, and the LLP liquidator will file a Form 9 report. This form details how the company was wound up, as well as the final accounts closing with a detailed explanation and the property that was sold. The creditors are sought for dissolution after the partners’ approval.Finally, it can be concluded that winding up an LLP is a two-way process in which one wishes to do so and decides to do so, as well as other circumstances forcing one to do so.
With effect from May 20, 2017, the Limited Liability Partnership Rules, 2009 were recently amended by introducing the Limited Liability Partnership Rules, 2017. The MCA has introduced LLP 24 as an amendment form, making it easier to wind up an LLP by simply submitting an application to the Registrar for the name of the LLP to be struck off. The procedure for winding up an LLP used to be very long and cumbersome before the introduction of the Limited Liability Partnership Rules, 2017. However, the new amendment has made the entire process much easier and simpler by introducing LLP form 24.
What happens after the winding-up on an LLP?
Once the winding-up process begins, a company is not permitted to continue doing business unless the LLP is required to complete the liquidation and distribution of assets. The company will be dissolved at the end of the process, and the LLP will effectively cease to exist.