This article provides a comprehensive guide on how to wind up a Limited Liability Partnership (LLP) in India. It covers the process, documentation, and important considerations involved in the winding-up procedure.
Incorporation of an LLP:
– LLPs are newly formed business entities introduced through the LLP Act, 2008 in India.
– LLPs offer limited liability to partners and enjoy audit exemption under certain conditions.
Process of Winding Up an LLP:
1. Winding up by the Tribunal:
– Initiated by the tribunal for various reasons, such as insufficient partners, inability to pay debts, or acts against public order.
– Non-filing of financial statements or annual returns for five consecutive years can also lead to winding up.
2. Voluntary Winding Up:
– Requires approval of 3/4th of the partners.
– LLP must make a declaration of no debt or ability to pay debts within one year.
– Assets and liabilities statement, along with valuation of assets (if any), must be filed.
Documentation and Procedure for Winding Up an LLP:
– Resolution for winding up the LLP should be passed and filed with the registrar within 30 days.
– Affidavit signed by the majority of partners declaring no debts or ability to pay debts within a specified period.
– Documents to be filed with the registrar:
– Statement of assets and liabilities attested by partners.
– Valuation report (if applicable).
Other Considerations:
– Form 2 should be submitted stating no unpaid sums or commitment to clear debts within a specified period.
– Publication of the winding-up resolution in a newspaper circulated in the registered office territory.
– Appointment of LLP liquidator, approved by the partners and creditors.
– LLP liquidator prepares a winding-up report and files it with the registrar and tribunal.
– Final accounts closure, disposal of property, and dissolution process.
Striking Off:
– Introduction of LLP Form 24 allows easy winding up by applying to the Registrar for striking off the LLP’s name.
– Prior to this amendment, the winding-up process was lengthy and complex.
After Winding Up:
– LLP ceases business activities and focuses on liquidation and asset distribution.
– Once the process is completed, the company will be dissolved, and the LLP will cease to exist.
Conclusion:
Closing an LLP involves following a specific process defined by the LLP Act, 2008. Whether initiated voluntarily or by the tribunal, it is essential to adhere to the necessary documentation and procedures to ensure a smooth winding-up process. The introduction of LLP Form 24 has simplified the process of striking off an LLP’s name.