The penalty for LLPs defaulting in filing of any statutory return is Rs.100 per day, without any maximum limit. Hence, its is often best to windup dormant LLPs so that there is no requirement to file LLP Form 11, LLP Form 8 and Income Tax Return for the LLP each financial year to maintain compliance and avoid penalty.
An LLP fulfilling the following conditions can file an application for striking off its name from the Register of LLP.
- LLP should be inoperative from the date of incorporation OR inactive for a period of at least one year
- LLP should not have any assets / liabilities as on date of application.
Before the introduction of the Limited Liability Partnership (Amendment) Rules, 2017, the procedure for winding up a LLP used to be long and cumbersome. However, with the introduction of LLP Form 24, the procedure has been made easy and simple.
The application for striking off the name should be submitted along with the required fee, consent of all partners, affidavits and indemnity by all designated partners, copy of the latest IT return and a Statement of Accounts not older than 30 days from the date of application certified by a Chartered Accountant.
A defunct LLP can make an application to the Registrar with the consent of all partners of the LLP for striking off its name from the register.
A defunct LLP refers to an LLP that has never started business or is not carrying any business for the immediate past one year and has no assets and liabilities.
Procedure for Closure
- Close the Commercial Activity: The closure of LLP first Form 24 can be filed only by LLPs that never commenced business or have ceased commercial activity. Hence, if the LLP is operational and the promoters wish to close the LLP, the LLP must first cease all commercial activity.
- Close All the LLP Bank Accounts: LLP Form 24 can be filed only by those LLP that have no creditors and no open bank account. Hence, prior to filing LLP Form 24, any bank account opened in the name of the LLP must be closed and a letter evidencing closure/ NOC of the bank account in the name of the LLP must be obtained from the Bank.
- Prepare Affidavits: All the Designated Partners of the LLP must first execute an affidavit, either jointly or severally, that the Limited Liability Partnership ceased to carry on commercial activity from (Date) or has not commenced business.Further, the LLP Partners must also declare that the LLP has no liabilities and indemnify any liability that may arise even after striking off its name from the Register. The liability of the Partners would not be extinguished even after closure of a LLP while using Form LLP 24.
- Prepare Documents: Along with Form LLP 24 the income tax return of the LLP and LLP deed must be enclosed. In case the LLP has not filed any income tax return and it has not carried on any business activity, then it is not required. Else, a copy of the acknowledgement of the latest Income-tax return filed must be attached with the application for closing the LLP.
- File Pending Documents: After incorporation of a LLP, the LLP agreement must be filed with the
MCA within 30 days of registration. In case this compliance was missed and LLP agreement was not filed, then the initial LLP agreement, if entered into and not filed, along with any amendments must be filed.
- CA Certificate: Once all the documents for filing of LLP Form 24 is prepared, a statement of accounts disclosing NIL assets and NIL liabilities, that is certified by a practicing Chartered Accountant up to a date not earlier than thirty days of the date of filing of Form 24 must be obtained.
- File final form to ROC: The above-mentioned documents along with LLP Form 24 can be then filed with the MCA to strike off the name of LLP. On processing the application, if found acceptable, the concerned Registrar of Companies would cause a notice to be published on the MCA website announcing the striking off of the LLP.
- Pan card of LLP
- LLP Deed
- Latest LLP ITR
- Bank closure Certificate
- LLP latest statement of Account
- Pan of partners
- Aadhar Card of Partners
- Latest address proof of Partners
- DSC of partners