There are many ways to close an LLP. Strike, voluntary liquidation, or bankruptcy are few options, depending on the facts. If the LLP is not in business or has never been in business since incorporation, we recommend following the simple LLP termination process.This option can be chosen if the LLP has no assets or liabilities.
The simplest mode is described here. H. Strike off To simplify the process of removing limited liability partnerships (LLPs), the central government amended the LLP Rules 2009 to make it easier for dissolved LLPs to apply to have their names removed from the name register. This was a long-awaited change that was actively sought by the LLP before it went out of business or filed the LLP Agreement (Form 3), and the LLP’s partners caused discord among themselves (the LLP contract between partners closed after induction).
- Mandatory submission of previous period even if there are no transactions:
- Prior to this change, delisting an LLP was not an easy option, as the previous LLP regulations (Rule 37) required all overdue forms to be filed prior to delisting. LLPs must submit at least two forms each year, even if they are non-operating. H. Annual returns (on electronic Form 11 by May 31 of each year) and bank statements (on electronic Form 8 by October 30 of each year). Late submissions will incur additional charges, which increase with each day of delay. Such surcharges have no cap and represent a significant financial burden for LLPs who have jointly filed outstanding applications for years. For LLPs that never started a business, the problem was even greater, and all compliance was ignored, perhaps due to disagreements between partners. The provision for delisting a dissolved company existed as a simple procedure that allowed a company that met certain conditions to be closed without submitting a notification for the previous year. For more information on company termination, please see the link.
- As of May 20, 2017, the LLP Rules have been amended.
- Web. On May 20, 2017, Rule 37 of the LLP Regulations 2009 was amended to provide necessary relief to interested parties who, prior to this amendment, had no way to close a defunct LLP without incurring significant additional fees. was dropped.
- Here are the main highlights of the changes:
- Submission of expired Forms 8 and 11:
- According to the notice, LLPs are only required to file overdue annual accounts and accounts by the end of the fiscal year in which the LLP ceases to trade or cease trading, and are not required thereafter. Certain attachments must be filed with Form 24 (an eForm 24 must be filed for LLP delisting).
- Bank statement showing zero assets and zero liabilities
- In practice, the statement must be certified by a CA.
- Statement must be prepared within 30 days of filing date
- A copy of the most recent ITR (Income Tax Return) confirmation filed if the LLP made the transaction
- If a copy of the original LLP agreement has not been completed and submitted, including any amendments made to it, if the LLP has not commenced business or trading since its incorporation.
See the Limited Liability Partnership (Amendment) Rules 2017 for further notice.
Conclusion:
A rule change introduces an LLP using Form 3. H. The LLP agreement will be significantly deferred as the LLP can immediately proceed with its Form 24 delisting application. Prior to the change, LLPs were required to complete the compliance required to file Forms 3, 8, and 11 before filing Form 24. Also, late submission of such forms is costly due to high surcharges. LLPs can now easily remove their name without incurring additional late filing fees (for years in which no transactions were made).
Now that the central government has dealt with the issue of simply removing the LLP, let’s wait and see when his second concern regarding surcharge caps is addressed.
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