Closing Limited Liability Partnership

Know Your Compliance for Closing Limited Liability Partnership

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Know About LLP Form 24 – Easily Close A LLP

Winding Up A LLP

The penalty for LLPs defaulting in filing any statutory return is ₹50 per day, without any maximum limit.
It is often best to windup dormant LLPs so that there is no requirement to file LLP Form 11, LLP Form 8 and Income Tax Return for the LLP each financial year to maintain compliance and avoid penalty.
Before the introduction of the Limited Liability Partnership (Amendment) Rules, 2017, the procedure for winding up an LLP used to be long and cumbersome.
However, with the introduction of LLP Form 24, the procedure has been made straightforward.

Filing LLP Form 24

Step 1 : Cease Commercial Activity

LLPs that have never done business or stopped can file Form 24. Thus, to close the LLP, the promoters must first stop all commercial activity.

Step 2: Close Bank Account(s)

LLPs without creditors or bank accounts can file Form 24. Thus, before filing LLP Form 24, the LLP’s bank account must be closed, and the bank must provide a closure letter.

Step 3: Prepare Affidavits & Declaration

The LLP’s Designated Partners must first sign an affidavit, either jointly or severally, stating that the LLP has not done business since (Date).

After striking off its name from the Register, the LLP Partners must also declare that the LLP has no liabilities and indemnify any liability that may arise. Form LLP 24 does not release Partners from liability after LLP closure.

Step 4: Prepare Documents

LLP deed and income tax return must accompany Form LLP 24. It is optional if the LLP has not filed an income tax return or conducted business. The LLP closing application must include a copy of the latest income-tax return acknowledgement.

Step 5: File Any Pending Documents

The MCA must receive the LLP agreement within 30 days of registration. If this compliance was missed, the initial LLP agreement and any amendments must be filed.

Before filing LLP Form 24, any overdue Form 8 and Form 11 returns from the financial year in which the limited liability partnership ceased business or commercial operations must be filed. The Limited Liability Partnership’s revenue-generating business ceased on the commercial operation date, so any transactions after that date, such as debtor payments or creditor payments, are not revenue-generating.

Step 6: Obtain a Chartered Accountant Certificate

After preparing all LLP Form 24 documents, a statement of accounts with NIL assets and NIL liabilities must be certified by a practising Chartered Accountant within 30 days of filing Form 24.

Step 7: File LLP Form 24

The MCA can strike off LLP names with the above documents and LLP Form 24 (Download LLP Form 24). The Registrar of Companies would publish a notice on the MCA website announcing the LLP’s dissolution if approved.

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