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Introduction

·         An LLP, otherwise known as a Limited Liability Partnership, is an autonomous legal entity or business officially registered in accordance with legal requirements. It is imperative for an LLP to be formally dissolved according to the specifications outlined in the LLP Act.

 LLPs that meet the specified criteria are eligible to submit an application for the closure of their LLP or the removal of their registered firm name from the LLP Register.

·         The LLP must either be non-operational from the date of incorporation or registration, or remain inactive for a minimum period of one year.

·         Furthermore, the LLP should have no ownership of assets, properties, or liabilities at the time of submitting the application.

The process for closure or striking off a firm name requires several documents and steps. These include submitting an application along with the specified fee payment, obtaining consent from all partners of the firm, providing affidavits and indemnity, and having copies of the most recent income tax return and bank account statement attested by a Chartered Accountant.

A defunct limited liability partnership (LLP) is a company or LLP that hasn't started its commercial operations yet or hasn't been doing any business lately. In this scenario, the entity hasn't been active for a year and doesn't have any assets, properties, or liabilities.

In the case of a defunct Limited Liability Partnership or LLP, the firm can initiate a closing procedure with the Registrar after obtaining acceptance from all partners. This procedure will result in the removal of the firm's name from the register.

What are the eligibility standards for the legal closure of LLP?

·         The LLP or Limited Liability Partnership firm has failed to commence its business operations since its inception or for duration of at least one year.

·         Notably, detained returns in Form 8 and Form 11 have been filed until the financial year in which the LLP ceased its activities.

·         Moreover, no new bank account has been established following the closure, as substantiated by a valid credential or certificate.

·         It is important to highlight that the LLP is entirely free from any financial obligations or debts to creditors or lenders.

·         Furthermore, the Income Tax Returns for the upcoming financial year have been diligently filed.

What is the exact procedure for winding up of the LLP?

·         In accordance with the law, a thorough and precise procedure must be followed when it comes to the dissolution or winding up of legally registered entities such as the LLP.

·         There are several procedures to complete the winding-up of a Limited Liability Partnership, including declaring the LLP as defunct and initiating the winding-up process.

Voluntary Winding-up of LLP

·         The process of voluntary winding-up of an LLP involves the decision of the directors or partners to cease operations and close the business.

·         To initiate this process, a resolution must be passed by at least 3/4th of the total number of members or partners.

·         This resolution needs to be submitted to the Registrar within 30 days of its approval, along with Form 1.

·         Additionally, a copy of this authorization report must be provided to the appointed authority responsible for overseeing the wind-up process of the LLP.

Compulsory winding-up of a Limited Liability Partnership (LLP)

·         The compulsory winding-up of a Limited Liability Partnership (LLP) refers to the process in which a court orders the dissolution of the LLP for various reasons.

·         These reasons include if the LLP itself decides to wind up, if the number of partners falls below the required minimum for a significant period of time, if the LLP is unable to repay its debts, if it engages in activities that go against the laws or integrity of India or pose a threat to public order or state security.

·         Additionally, if the LLP fails to submit required reports or statements to the Registrar for five consecutive financial years, or if the court deems it fair and just to wind up the LLP, the court may also order compulsory winding-up.

Closure with Creditors

·         In order to wind up a firm with creditors, the majority of partners must complete Form-2 to confirm that they have no unpaid loans or debts, or will repay them within a year.

·         Once the resolution for winding up is filed, it must be published in a newspaper within 14 days, after receiving consent from investors or creditors.

·         The advertisement should be placed in a newspaper located where the registered office or principal place of the firm is situated.

How LLP winding-up or dissolution process will take place?

The winding-up or dissolution process of an LLP involves three main steps. The first step is voluntary dissolution, which requires the partners and creditors of the firm to pass a resolution. After this resolution, all partners must sign an affidavit, bond, and other necessary documents. These documents, along with a form to strike off the name of the LLP, are then submitted to the MCA (Ministry of Corporate Affairs). This process effectively closes down the LLP.

What is the process of selecting a liquidator and important liquidation report?

- If you do decide to appoint a liquidator, the LLP must do it within 30 days of passing a resolution. Of course, it's important to consult with any investors or creditors you may have.

- The liquidator will take care of all the necessary tasks to complete the closure process and will prepare a detailed liquidation report.

- This report will contain all the important information and steps required for the winding-up process, so you won't miss a thing.

- Once the liquidation report and the resolution approving the liquidation are ready, they must be submitted to the registrar.

What is the process involved in tribunal dissolution?

·         The process of dissolution of a Limited Liability Partnership (LLP) involves several steps. Firstly, an application form, along with a summary and report, is submitted to the tribunal.

·         If the tribunal approves of the winding-up process, it will issue the necessary order to dissolve the LLP. This order is then submitted to the registrar by the liquidator.

·         If the registrar finds everything in order, a notice will be published in the Official Gazette announcing the winding up or strike off of the LLP.

·         If there are no objections raised within 30 days, the registrar will proceed to dissolve or wind up the LLP.