Rule 37 of the Limited Liability Rules, 2009 deals with the striking off name of Defunct LLP. Defunct means those LLPs which are not functioning or not operating.
Hence, it is pre-requisite that LLP must be defunct for at least 1 year before applying for closure.
It provides that -"where a limited liability partnership is not carrying on any business or operation for a period of one year or more, such LLP can make an application to the Registrar, with the consent of all partners of the limited liability partnership for striking off its name from the register".
Limited Liability Partnership (Amendment) Rules, 2017 added sub-rule 1A after sub-Rule 1 of Rule 37 as follows:
i. The LLP shall file overdue returns in Form 8 and Form 11 up to the end of the financial year in which it ceased to carry on its business or commercial operations before filing Form 24;
ii. Enclose along with Form 24, -
(a) a statement of account disclosing nil assets and nil liabilities, certified by a Chartered Accountant in practice made up to a date not earlier than 30 days of the date of filing of Form 24;
(b) An affidavit signed by the designated partners, either jointly or severally, to the effect:
- that the Limited Liability Partnership has not commenced business or where it commenced business, it ceased to carry on such business from ………….(dd/mm/yyyy);
- that the limited liability partnership has no liabilities and indemnifying any liability that may arise even after striking off its name from the Register;
- that the Limited Liability Partnership has not opened any Bank Account and where it had opened, the said bank account has since been closed together with certificate(s) or statement from the respective bank demonstrating closure of Bank Account;
- that the Limited Liability Partnership has not filed any Income-tax return where it has not carried on any business since its incorporation, if applicable.
(c) a copy of the acknowledgement of the latest Income-tax return;
(d) copy of the initial limited liability partnership agreement, if entered into and not filed, along with changes thereof in cases where the Limited Liability Partnership has not commenced business or commercial operations since its incorporation.
Documents/ Checklist For Closure of LLP
The following documents are required for closure of LLP
- Detailed Application for Closure of Limited Liability Partnership (LLP);
- Affidavit executed either individually or jointly by all the Partners;
- Consent of all the partners;
- Statement of accounts showing Nil assets and liabilities certified by Chartered Accountant in practice not older than 30 days from the date of filing of an application;
- A copy of acknowledgement of latest Income Tax Return;
- Initial LLP Agreement along with all supplementary agreements, if any.
Process of Closure of LLP or Strike off of an LLP
- Close the Bank Account of the LLP;
- Sell the assets, if any and pay off the liabilities, if any;
- Take the written consent of all partners for strike off;
- Drafting of all the requisite documents for closure of LLP;
- Filing of Form 24 with the Registrar.
Once, the E-form 24 is filled by the LLP to concerned jurisdictional Registrar, it has to wait for approval from the Registrar as to whether all documents attached in forms are proper or not. Registrar may ask for any additional documents for his satisfaction.
Once, Registrar is satisfied, he shall send name of the LLP for publication in official gazette asking to raise objections from general public. If no objection is received, Registrar will strike off the name of LLP from its register.
FAQ with Respect to Strike off
1. Which date one should reckon for cessation of business?
The date of cessation of commercial operation is the date from which the Limited Liability Partnership ceased to carry on its revenue generating business and the transactions such as receipt of money from debtors or payment of money to creditors, subsequent to such cessation will not form part of revenue-generating business.
2. Whether up to date annual filing is required for Closure of LLP?
As per LLP Amendment Rules, 2017, annual filing forms like form 8 and 11 is required to be filled up to the date of financial year in which LLP ceased to carry on business or operation. For e.g: LLP ceased the business on 31st May, 2020 then form 8 and 11 needs to filled for F.Y upto 2020-21.
3. What if Initial LLP Agreement is not filled?
As per LLP Amendment Rules, 2017, initial agreement is not filled and LLP is inoperative since incorporation then application for strike off is allowed if LLP Agreement is filled at the time of strike off but if LLP has commenced business and LLP Agreement is not filled then LLP must file LLP Agreement in form 3 before filing application for strike off.
4. What if Income Tax return is not filled?
As per LLP Amendment Rules, 2017, Income tax return is required to be filled up to the date of the financial year in which LLP ceased to carry on its business or operation. If LLP is not commenced business since incorporation then filing of IT return is not required and LLP can directly apply for strike off.
CAclubindia
