Online Wind Up or Closing LLP Company (Closure Procedure)
The MCA recently made amendments to the LLP Rules 2009 according to which filing of LLP Form 24 is mandatory to close an LLP in India.
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OVERVIEW
Understanding the Closure of a Limited Liability Partnership
A limited liability partnership (LLP) is one of the most common business structures in India, which holds each partner of the firm liable for suffering financial losses up to a certain sum.
In fact, forming a Limited Liability Partnership requires minimal legal compliance but offers many advantages, such as flexibility in formation, exemptions from paying taxes, status of a legal entity, different levels of membership, partnership name protection, etc.
However, there may be various reasons due to why business owners may feel the need to shut down LLP’s operations.
For example, if the limited liability partnership firm has declared itself bankrupt, or when the business activities are suspended for a long time, or the business has not completed the annual compliance.
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Ways to Close
Ways to Close an LLP Online
1. Declaring an LLP as Defunct
If an LLP wishes to cease operations or hasn’t conducted business for over a year, it may apply to be declared as "defunct." This allows the LLP to officially close its operations and have its name removed from the registry.
✅ To close an LLP under this method, the following steps are essential:
- File eForm 24: In line with Rule 37 of the LLP Rules, 2009, submit eForm 24 to strike the LLP’s name off the register.
- Registrar’s Authority: The Registrar has the power to dissolve any inactive LLP if valid reasons exist. In such cases, the Registrar will notify the LLP of the intent to remove it from the registry, giving the LLP an opportunity to respond.
This process helps LLPs avoid compliance issues by officially closing their business on legal grounds.
2. Winding Up an LLP
According to Sections 63, 64, and 65 of the LLP Act, 2008, LLPs may wind up their operations in specific circumstances. There are two primary ways to proceed with the winding up of an LLP:
✅ Voluntary Winding Up
LLP partners may choose to voluntarily close the business if they agree to cease operations. This option provides flexibility and control over the winding-up process.
✅ Compulsory Winding Up
An LLP may be mandatorily wound up under the following conditions:
- The number of LLP partners falls below two within six months.
- The LLP is unable to settle its debts.
- The LLP violates India’s integrity or public order.
- The Tribunal finds a valid reason for dissolving the LLP.
By following these legal provisions, LLPs can formally wind up and close their business operations in a compliant and structured manner.
Process
Process of Limited Liability Partnership (LLP) Closure
When partners decide to close a Limited Liability Partnership (LLP), they must follow a specific legal procedure. This includes submitting an online application (e-Form 24) to the Registrar of Companies (ROC).
✅ Step 1: Obtain Partner Consent
Before closing the LLP, ensure all partners consent to the closure process.
✅ Step 2: Cease Business Operations
The LLP must halt all commercial activities and stop accepting orders. Note that the business should have ceased operations for at least two financial years before applying for closure.
✅ Step 3: Close Business Bank Accounts
Partners should close all business bank accounts by submitting a formal application to the bank manager.
✅ Step 4: Submit Affidavits and Declarations
Each designated partner must submit an affidavit stating the LLP has no active operations, commercial activities, dues, or liabilities. Consider consulting a professional for proper documentation.
✅ Step 5: Prepare Documentation
Partners need to provide Income Tax Return (ITR) statements, if applicable. If the LLP did not start operations, ITR statements may not be necessary.
✅ Step 6: Finalize Financial Records
Ensure that all LLP accounting records are accurate and up-to-date. A statement of assets and liabilities, certified by a practicing CA, must be submitted and should not be older than 30 days.
✅ Step 7: File Form 24
Submit a resolution to the ROC with e-Form 24, declaring that the LLP has no outstanding debts. Attach required affidavits with this submission.
✅ Step 8: Striking Off the LLP
Once the ROC verifies the documents, they will strike off the LLP from the register, officially closing it.
Required Documents
Documents Required for Winding Up a Limited Liability Partnership (LLP)
To initiate the winding up of an LLP, applicants must gather and submit a specific set of documents.
Here’s the complete checklist.
1. Detailed Closure Application
Submit a comprehensive application for the closure of the LLP, detailing the intent and reasons for winding up.
2. Affidavit of No Liabilities
Provide an affidavit signed by all partners, declaring that the LLP has no outstanding liabilities or dues.
3. Partner Consent
Ensure all partners provide written consent, agreeing to the LLP closure.
4. Statement of Assets and Liabilities
Submit a certified statement of assets and liabilities, verified by a Chartered Accountant (CA), that is no older than 30 days.
5. Income Tax Return (ITR) Statements
Include the latest ITR statements to confirm the LLP’s financial status. If the LLP has not conducted any business, ITR statements may not be required.
6. e-Form 24 with Indemnity Bond
File e-Form 24 along with an Indemnity Bond to the Registrar of Companies (ROC) as part of the official closure process.
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Why Choose JustStart?
Why Choose JustStart for LLP Closing?
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✅ Easy & Hassle-Free Process
If your LLP has been inactive for over a year with no business activities, JustStart makes the closure process straightforward and stress-free.
✅ Minimal Compliance Requirements
Inactive LLPs are still subject to specific compliance regulations. By choosing JustStart for LLP closing, you can eliminate these obligations and focus on future ventures without the administrative burden.
✅ Strategic Execution
Our team handles every step, from planning to execution, ensuring each stage of the LLP closure process is thoroughly and efficiently managed according to industry benchmarks.
✅ Driven by Commitment and Expertise
At JustStart, we are dedicated to supporting visionaries who aim to achieve great things. With our commitment and expertise, we ensure a smooth, hassle-free LLP closing experience.
✅ Deadline-Oriented Service
Time is valuable, and we take it seriously. We implement strict measures to ensure that your LLP closure process adheres to all critical deadlines.
✅ Quality Assurance and Client Satisfaction
JustStart prioritizes quality at every level. We systematically review our processes to minimize errors, ensuring each task is completed to our high standards and meets your expectations.
Locations
LLP Closure in Other States and Cities
FAQs
LET'S CLEAR ALL THE DOUBTS!
As per legal experts, a business can shut down its operations in the following two ways:
- Declaring a company insolvent
- Closing down business operations
No. One year should have passed where the LLP has not done any business since its formation before its dissolution.
No. First, the business operations of the LLP should be ceased and at least a period of two years should have been passed before filing its closure application.
No. The law typically requires the firm to first close all the accounts and clear all the liabilities before they can be listed for closure. Only after receiving a final statement, can company partners apply to strike off the LLP’s name from the registrar.
ROC is a Government office with whom companies get registered. Every State has one ROC office except some states.
No. Filing form 24 is mandatory to close a limited liability partnership firm.
The cost of closing an LLP in India may vary from region to region and depend on the services hired by the applicants. If you hire an expert and professional services, you can easily find their services within an affordable budget of Rs. 6000-10,000. However, it is always suggested to gather complete details to avoid paying any hidden charges.
Given all the documents are prepared accurately and the applicants have hired professional legal help, you can expect to complete the procedure within 15–30 days. In cases of delay, the process may stretch up to two months or more. Therefore, it is best to opt to hire a dedicated team assistant like JustStart.
Some of the steps, like obtaining affidavits and filing form 24, and require extreme care. Thus, the process can be complex if you have a lack of experience in the legal field.
If a business chooses not to close an LLP even after one year of business inactivity, the law holds them subject to paying a penalty.
