Closure of LLP
Closure of an LLP requires us to follow statutory laws. The purpose of closure is very important as the process is based on the type of closure. Some of the reasons of closure might be non-operation, recurring losses, dispute among partners or huge debts.
The designated partners must identify the best way to comply with the LLP Act, 2008. If the LLP has no liabilities or debts, it can be instantly wound up after an unanimous decision by all stakeholders. If the LLP has pending debts or liabilities, the LLP must contact the National Company Law Tribunal to wind up.
An application must be filed with ROC to erase the name of the LLP from the register.
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Process for Closure of LLP
Closure of Inactive LLP
- If the LLP has not yet commenced business operations or is not functional currently.
- If the LLP does not possess any assets or hold any liabilities with bank account opened/not-opened.
- The designated partners must provide an affidavit and indemnity bond to make a settlement for the existing liabilities if any, or that will be incurred in future.
- A closure application must be filed with ROC to get the name of the LLP removed from the register.
Closure of LLP with Liabilities / Debts
- The partners must first internally decide to close the LLP; then, they must inform their creditors by giving appropriate notice of the same.
- The creditors must confirm the closure and get it filed with the National Company Law Tribunal (NCLT).
- An official liquidator will be appointed for the LLP who must dissolve the assets and settle the liabilities. He then files a report with NCLT.
- NCLT reviews the case. If convinced, they confirm the closure and report to ROC.
Closure made by NCLT
- If the designated partners are in conflict with each other, an application can be filed with the NCLT for closure.
- If the number of partners are below the statutory minimum of 2 for a period of six months or more.
- If the LLP has not filed Form-11 and Form-8 for 5 years consecutively.
- If the NCLT reviews and determines that the LLP is going against the integrity and security of the state-wide or country-wide public.
Process & Timelines
Closing of Bank Account
The designated partners must approach their bank to initiate closure of their account before commencing the LLP closure process. They must obtain a closure certificate from the Bank.
Assets & Liabilities
A statement of all assets & liabilities must be prepared and certified by the auditor of the company or a practicing CA
Consent of the Partners
The partners must meet and consent to the closure of the LLP as prescribed in the LLP agreement.
Indemnity Bond & Affidavit
Once the partners agree to the closure, an affidavit undertaking to settle any liabilities arising in future along with an indemnity bond must be filed with ROC.
DSC of Designated Partner
Digital signature of at least one designated partner must be provided along with the online closure form.
Application with ROC
An application along with the attachments signed by a CA / Cost Accountant and the designated partners, must be submitted to the ROC. If the documentation is complete in all respects, the ROC closes the company within 90 to 120 days of the application.