Winding Up a Limited Liability Partnership (LLP) The penalty for not filing any statutory return is Rs. 100 per day, with no upper limit. As a result, winding up dormant LLPs is frequently preferable so that the LLP does not have to file LLP Form 11, LLP Form 8, and an Income Tax Return each year to maintain compliance and avoid penalties.
The procedure for winding up a limited liability partnership (LLP) used to be lengthy and complicated prior to the introduction of the Limited Liability Partnership (Amendment) Rules, 2017.
However, the procedure has been simplified with the introduction of LLP Form 24.
Therefore, it is best for entrepreneurs with dormant or defaulting limited liability companies (LLPs) to take advantage of this opportunity to close the LLP.
Using Form 24 to Close an LLP: The following steps can be taken to close an LLP:
The Cease Commercial Activity LLP Form 24 can only be filed by LLPs that have either ceased their commercial activity or never started a business. Therefore, the LLP must immediately cease all commercial activity if the promoters wish to close the LLP while it is operating.
Close Bank Account(s) LLP Form 24 can only be filed by LLPs with no open bank accounts and no creditors. As a result, a letter from the Bank attesting to the closure of any bank account opened in the LLP’s name must be obtained prior to filing LLP Form 24, as must any bank account opened in the LLP’s name.
Affidavits and Declarations All Designated Partners of the LLP must first sign an affidavit stating that the Limited Liability Partnership has ceased all commercial activity since (Date) or has not begun business. This affidavit can be signed jointly or separately.
In addition, even after removing the LLP’s name from the Register, the Partners of the LLP are required to declare that the LLP does not have any obligations and to indemnify the LLP for any obligations that may arise. Using Form LLP 24, the Partners’ liability would continue even after an LLP was closed.
Prepare Documents The LLP’s income tax return and LLP deed must be included with Form LLP 24.It is not required if the LLP has not filed an income tax return or engaged in any business activity. Otherwise, the application to close the LLP must include a copy of the latest income tax return acknowledgement.
The LLP agreement must be filed with the MCA within 30 days of registration of the LLP after incorporation. In the event that this compliance was not met and the LLP agreement was not filed, the initial LLP agreement, along with any amendments, must be filed.
In addition, before submitting LLP Form 24, all overdue returns on Forms 8 and 11 must be filed up until the end of the fiscal year in which the limited liability partnership ceased to conduct business or commercial operations. The Limited Liability Partnership ceased carrying on its revenue-generating business on the date from which it ceased, and any transactions that occurred after that date, such as receiving money from debtors or paying money to creditors, will not count as revenue-generating business.
Obtain a Statement of Accounts Certifying NIL Assets and NIL Liabilities Certified by a Practicing Chartered Accountant must be obtained within thirty days of the filing date of LLP Form 24, following the preparation of all necessary documents for the form.
Step 7:You can then file LLP Form 24 (Download LLP Form 24) and the aforementioned documents with the MCA to remove the LLP name. The concerned Registrar of Companies would, upon processing the application, publish a notice on the MCA website announcing the LLP’s termination if it was determined to be acceptable.