Limited Liability Partnership(LLP) is a deal where all the partners have limited liabilities. Essentially, an LLP is set up under formal rules and restrictions. In comparison to traditional partnership documents, these rules and regulations are much more complex. The process of closing an LLP in India is complex.
LLP Act, 2008 outlines the basics of closing an LLP in India, the required LLP closure documents, and the LLP closure fees.
What is the process to close an LLP company in India online?
The LLP is a corporation that regulates all the legalities and paperwork. In order to register or close an LLP, there is a specified procedure. The following are two major scenarios that lead to the documents for closure of LLP in India.
1. Declaring the LLP Defunct
In this case, a petition should be filed to the registrar.
- In the petition, all LLP details are included, and it should be declared that the LLP is no longer in operation or extinct.
- The E-Form 24 must be used to document the requirements of Section 37(1)(b).
- LLP documents must be provided in their entirety
- As soon as compliance is achieved, the LLP’s name will be removed from the official register of LLPs
2. Involuntary winding up of an LLP
The process of voluntary closing an LLP is long and complicated. During this process, Vakilsearch can provide expert advice and complete backup. To close an LLP, the first step is to decide to do so
- It is possible for LLPs to terminate voluntarily if 3/4th of their partners agree to do so
- Document the decision on Form 1 within 30 days of enactment by providing a copy of the file to the registrar.
Creditors and winding up
LLP voluntary winding up is the next step
- The partners are asked to provide an acceptance statement in Form 2
- They should provide evidence that there is no outstanding amount or that they will be compensated for the outstanding due within a specified period of time
- A LLP should be closed within a year of its enactment.
Public Notice for Winding up the LLP
- A public notice about the LLP’s closure should be published in a newspaper within 14 days of the decision being passed
- Either the one circulating in the province where the LLP is registered or that of the main department where the LLP operates
- As well as serving as proof of the LLP’s closure, this publication informs the public.
Liquidator appointed for LLP
- LLP liquidators are appointed only with the approval of a majority of the partners
- LLPs have a fixed liquidator compensation
- Choosing liquidators requires the approval of two-thirds of creditors
- The creditor and the partner can both assign an LLP liquidator. Creditors can, however, appoint the LLP liquidator.
- Upon winding up an LLP, all liabilities are discharged, and the assets are liquidated
- After this process has been completed, the LLP liquidator will provide Form 9.
- You will find all the information about the winding-up and how it was conducted in this document
- The LLP is successfully dissolved at the end.
In the case of a FTE form, the total LLP closure fee is approximately $1000. As soon as the process is complete, all the evidence will be published on the Ministry of Corporate Affairs website for one month for the public’s awareness.
The main reason for closing a Limited Liability Partnership in India
- If the LLP has completed any specified program
- Bankruptcy has occurred at the LLP
- As soon as startups see that they are not profitable, they close down their LLPs
- One can close the LLP when there hasn’t been an employment action for a long time because of a crisis
- The members are not ready to proceed with the employment or partnership
- After the death of one partner, the other partner is ready to close the LLP.
Vakilsearch Can Help You Close an LLP
In India, closing an LLP may take from 3 to 6 months depending on the registrar’s department that receives the following authorisation petition. LLPs can be closed in India in three simple steps with Vakilsearch. Contact Vakilsearch and we will help you close your LLP.