Annual Filing of OPC and Small Company (MGT-7A)

Striking-off of LLP (LLP Closure Process)

Any LLP can close down its business by adopting any of the following two ways:

A)         Declaring the LLP as Defunct   In case the LLP wants to close down its business or where it is not carrying on any business operations for the period of one year or more, it can make an application to the Registrar for declaring the LLP as defunct and removing the name of the LLP from its register of LLP’s. eForm 24 is required to be filed for striking off the name of LLP under clause (b) of sub rule 1 of Rule 37 of LLP Rules 2008. Similarly, Registrar also has the power to strike off any defunct LLP after satisfying himself of the need to strike off and has reasonable cause. However, in this case, registrar has to send a notice to the LLP of his intention and request to send their representation within one month from the date of the notice. The Registrar shall publish such notice or content of the application made by the LLP on its website for a period of one month for the information of the general public. In case no reply is received within the mentioned period, registrar may strike off the name of LLP.

B) Winding up of LLP     Section 63, 64 and 65 of LLP Act 2008 governs the process for winding up of the LLP. It is the process where all the assets of the business are disposed off to meet the liabilities of the same and surplus any, is distributed among the owners. The LLP Act 2008 provides for following two modes for winding up the LLP i.e.: ◦   Voluntary winding up ◦   Compulsory winding up Voluntary Winding up: Under this, the partners may between themselves decide to stop and wound up the operations of the LLP. Compulsory winding up: A limited liability partnership may be compulsorily wound up by the Tribunal,— ◦   if the limited liability partnership decides that limited liability partnership be wound up by the Tribunal; ◦   if, for a period of more than six months, the number of partners of the limited liability partnership is reduced below two; ◦   if the limited liability partnership is unable to pay its debts; ◦   if the limited liability partnership has acted against the interests of the sovereignty and integrity of India, the security of the State or public order; ◦   if the limited liability partnership has made a default in filing with the Registrar the Statement of Account and Solvency or annual return for any five consecutive financial years; or ◦   if the Tribunal is of the opinion that it is just and equitable that the limited liability partnership be wound up. For details, refer LLP Act, 2008 and “ Limited Liability Partnership (Winding up and Dissolution) Rules, 2010”

 

Winding up of LLPs are lengthy process in itself therefore its better option to choose the route of strike-off of LLPs. In case the LLP wants to close down its business or where it is not carrying on any business operations for the period of one year or more, it can make an application to the Registrar for declaring the LLP as defunct and removing the name of the LLP from its register of LLP’s.

The Ministry of Corporate Affairs vide its notification dated 16th May, 2017 notified the Limited Liability Partnership (Amendment) Rules, 2017 to amend the Limited Liability Partnership Rules, 2009 which came into force with effect from 20th May, 2017.

Vide said notification the detailed conditions has been prescribed for the application in Form 24 for striking off name of the LLP and also Form 24 has been amended.

 

Ques: Whether Company has to complete Annual Fillings with ROC before filling application for Strike off of LLP?

Ans: As per amended rule of Limited Liability Partnership (Amendment) Rules, 2017 LLP shall follow the conditions before filing of striking -off of LLP form Form-24.

ü File overdue returns in Form 8 and Form 11 up to the end of the financial year in which the limited liability partnership ceased to carry on its business or commercial operations before filing of Form 24.

Conclusion:- Before filing of Form-24 the LLP should file Form-8 and Form -11 with ROC and Director KYC of designated partner should also be completed.

Note:- It should be noted that the date of cessation of commercial operation is the date from which the Limited Liability Partnership ceased to carry on its revenue generating business and the transactions such as receipt of money from debtors or payment of money to creditors, subsequent to such cessation will not form part of revenue generating business. (As per Rule 37 of LLP Rules, 2008)

Documents need to be attached with Form 24:

Following documents need to be attached with Form-24 with prescribed fee and in prescribed manner:

(a) a statement of account disclosing nil assets and nil liabilities, certified by a Chartered Accountant in practice made up to a date not earlier than thirty days of the date of filing of Form 24.

(b) an affidavit signed by the designated partners, either jointly or severally, to the effect—

ü that the Limited Liability Partnership has not commenced business or where it commenced business, it ceased to carry on such business from ………….(dd/mm/yyyy).

ü that the limited liability partnership has no liabilities and indemnifying any liability that may arise even after striking off its name from the Register.

ü that the Limited Liability Partnership has not opened any Bank Account and where it had opened, the said bank account has since been closed together with certificate(s) or statement from the respective bank demonstrating closure of Bank Account.

ü that the Limited Liability Partnership has not filed any Income-tax return where it has not carried on any business since its incorporation, if applicable.

(c) a copy of the acknowledgement of the latest Income-tax return filed under Sec.43 of the Income-tax Act, 1961 and the rules made thereunder for the time being in force, where the limited liability partnership has carried out any business and has filed such return.

(d) copy of the initial limited liability partnership agreement, if entered into and not filed, along with changes thereof in cases where the Limited Liability Partnership has not commenced business or commercial operations since its incorporation.

 

Author:- Author of this Article is CS Vinay Pandey

About CS Vinay Pandey:-  CS Vinay Pandey is Associate Member of Institute of Company Secretaries of India and Law Graduate from VBSPU, Jaunpur.  He is Co-Founder of Professional Study Point and faculty of Financial Management Paper of CS Professional Programme.

CS Vinay Pandey

(Company Secretary & Writer)

(CS, LLB, B.Com)

cs.vinaypandey@gmail.com  

Mob/Whatsapp: 9911473074

 

Disclaimer: The content of this article is intended to provide a general guide to the subject matter and that the same shall not be treated as legal advice. For any queries, the author can be reached at cs.vinaypandey@gmail.com