Closing of Limited Liability Partnership

• The Limited Liability Partnership (Amendment) Rules, 2017, were recently revised by the Ministry of Corporate Affairs to modify the Limited Liability Partnership Rules, 2009.
• The MCA has created LLP Form 24 with this modification, and it is now possible to simply dissolve an LLP by submitting the application form to the Registrar for striking out the LLP's name.
  Winding Up an LLP
• If an LLP fails to file a statutory return, it will be liable to pay Rs.100 per day as a fine, with no maximum limit.
• As a result, it is generally preferable to wind up inactive LLP so that there is no need to submit LLP Form 11, LLP Form 8, and ITR for the LLP each fiscal year in order to sustain compliance and avert penalties.
• Prior to the implementation of the Limited Liability Partnership (Amendment) Rules of 2017, the process for dissolving an LLP was lengthy and time-consuming.
• However, with the launch of LLP Form 24, the process has been simplified and made easier.
• As a result, it is favourable for businessmen who have dormant or defaulting LLPs that are incurring penalties to take advantage of this chance to close the LLP.

 LLP Form 24 Filing
The below-mentioned steps need to be taken to close an LLP by submitting Form 24:

Step 1: Stop all commercial activity

• LLP Form 24 can only be filed by LLPs who have never started a company or have discontinued economic operations.
• As a result, if the LLP is still in business and the promoters desire to close it, the LLP must first halt all economic activities

Step 2: Deactivate the bank account(s)

• Only LLPs with no creditors and no open bank accounts can submit LLP Form 24.
• As a result, prior to submitting LLP Form 24, any bank account created in the LLP's name must be closed, and a statement from the bank confirming the closure of the bank account must be obtained.

Step 3: Draft Affidavits and Declarations

• It is obligatory that all of the LLP's Authorized Partners must first sign an affidavit, either individually or collectively, stating that the Limited Liability Partnership discontinued engaging in commercial activity on (Date) or has not begun business.
• Furthermore, the LLP Partners should declare that the LLP is not bound by any obligations and must indemnify any liability that may emerge even post the LLP's name is struck from the Register.
• Even post the closing of an LLP via Form LLP 24, the Partners' responsibility would not be eliminated.

Step 4: Prepare Documents

• The LLP's income tax return and LLP deed should be attached with Form LLP 24.
• This process is not necessary if the LLP has not filed any income tax returns and has not engaged in any commercial activity.

Step 5: Submit Any Outstanding Documents

• It is obligatory to file the LLP agreement with the MCA within 30 days of registration post the LLP is formed.
• If the aforementioned compliance was not met by the LLP, the very first LLP agreement, if entered into but not filed officially, along with revisions, if any, must be filed with the MCA.

Step 6: Get certificate from Chartered Accountant

• Once all of the documentation for submitting LLP Form 24 has been completed, a statement of accounts indicating NIL assets and NIL liabilities validated by a practising Chartered Accountant up to a date not earlier than 30 days prior to the date of submitting Form 24 must be acquired.
• It is obligatory that all of the above-mentioned documentation, together with the LLP Form 24, must be filed with the MCA to strike off the LLP designation from your company.  If the application is approved, the Registrar of Companies will issue a notice on the MCA website notifying the dissolution of the LLP.

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