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Closure of LLP in India
A complete guide to legally winding up and dissolving your Limited Liability Partnership
Overview of LLP Closure
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.
For closing an LLP, a resolution has to be filed by directors of the company with the Registrar of Companies, within 30 days of its passing. Within 15 days of passing the resolution the statement of asset and liabilities after the closure of account, to the date of winding up of the LLP, attested by at least two partners must be submitted. A report of the valuation of company assets must be prepared.
Once this has been done, the majority of partners need to make a declaration to the effect that the LLP has no debts or that it is a position to pay all debts within a specified period, not exceeding one year from the date of winding up of the company.
General Conditions for Closure
If you are willing to close the LLP, then it must meet the following conditions:
Inactive for 1 Year
The LLP should be inactive for a period of at least 1 year, or it should be inoperative from the date of establishment.
No Assets
The LLP should not have any assets on the date of application. Or any other genuine reason justified by the authority.
Detailed Paperwork
Submit the application along with required fees, affidavit, and consent from all partners. You also need to submit the IT return and a Statement of Account (of the last 30 days).
Note: The closure of LLP can take up to two months, provided the partners are quick to complete the procedures involved.
Detailed Process for Closure
Follow these steps closely to ensure a smooth and legal winding up of your LLP.
Click on the folders to read the steps
Step 1: Resolution
A special resolution has to be passed by all or 3/4th of the partners of the company, agreeing to dissolve the partnership.
Step 2: Form No. 1
Within 30 days of passing the resolution, form no. 1 is filed with the Ministry of Corporate Affairs (MCA) with a copy of the resolution.
Step 3: No Debt Declaration
At least two members of the LLP have to declare that it has no debts or liabilities. Or if it does, it will be settled within one year from the commencement of winding up.
Step 4: Form 4 & Assets
Form No. 4 along with a report of the value of LLP’s assets has to be submitted to the registrar within 15 days of filling the forms and a statement declaring that the LLP is not being closed to cheat anyone.
Step 5: Creditor Consent
The next step is to acquire consent from the creditors of the LLP, to wind up the business. For this purpose, at least 2/3rd of company creditors have to provide consent.
Step 6: Filling Form 6
Within 14 days of receiving consent from creditors, an advertisement has to be filed in the local newspaper. In case the LLP has assets or liabilities, a liquidator is appointed and his/her statement needs to be filed using form 6.
Step 7: Filling Form 9
Prepare the LLP’s final account statement, and submit them along with form 9 to conclude all formalities.
Removal of LLP’s Name
After one month, the Registrar of Companies will remove the LLP’s name from the register and publish a notice in the Official Gazette, thereby legally closing/dissolving the LLP.
Documents Required
Ensure you have the following documents ready before initiating the closure application:
- LLP Details & LLP Agreement
- Pan Card of Partners
- Aadhaar Card of Partners
- Latest Address Proof of Partners
- Consent letters
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