Dear Professionals
Smiles for All
In this article, we shall study
about the various aspects of striking off a LLP, Often; entrepreneurs are form
Limited Liability Partnerships but are not able to maintain the same. Due to
adverse market situation or less business opportunity Partners fails to carry
or commence the business of LLP. Also, the penalty for LLPs defaulting in
filing of any statutory return is Rs.100/- per day, without any maximum limit.
Hence, it is often best to strike off/close 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.
The LLP Act, 2008 provides some
important guidelines as to how one can close an LLP. The provisions of striking
off of LLP are governed by Rule 37(1) of the Limited Liability Partnership
Rules, 2017. Accordingly, the LLP can be stroked off in following two ways,
likewise that of a Company:
MANDATORY STRIKING OF THE LLP:
Under mandatory striking off, the ROC shall
send a notice to the LLP of his intention to strike off the name of the LLP
from the register and requesting them to send their representations within a
period of one month from the date of the notice in the case the LLP is not
carrying on any business for a period of two preceding years. Here it is
important to note that the ROC shall have reasonable cause to believe that the
LLP is not doing any business in case Form 8 and Form 11 are not filed for previous
two years.
VOLUNTARY STRIKING OFF THE LLP:
Under voluntarily striking off of
LLP, the LLP may make an application in e-Form 24 to the Registrar with the
consent of all the partners of the LLP for striking off its name from the
register.
Any LLP which has been
inoperative for more than 1 year or incorporated for more than One year and
have no business can apply for Closure
THE FOLLOWING PROCEDURE CAN BE FOLLOWED FOR CLOSING A LLP BY
FILING FORM 24:
SERIAL
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PARTICULARS
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1.
Complete all the Pending Compliances.
|
After
incorporation of a LLP, the LLP agreement must be filed with the MCA
within 30 days of registration. In case this compliance was missed and LLP
agreement was not filed that compliance must be completed.
Any overdue
returns in Form 8 and Form 11 up to the end of the financial year in which
the limited liability partnership ceased to carry on its business or
commercial operations must be filed before filing LLP Form 24.
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2.
Ensure all Statutory Dues, if any are settled.
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Prior to
filing LLP Form 24, Any Dues towards statutory authorities must be clear ,
Return regarding Income Tax must be filed, Since the copy of the same shall
be attached in the Form-24.
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3.
Closure of Bank Account, if Any
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Prior to
filing LLP Form 24, any bank account opened in the name of the LLP must be
closed and a letter evidencing closure of the bank account in the name of the
LLP must be obtained from the Bank same can be demanded by the ROC to be
attached in Form.
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4. Obtain
Certificate from Chartered Accountant.
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A statement of accounts disclosing NIL assets
and NIL liabilities, that is certified by a practicing
Chartered Accountant up to a date not earlier than thirty
days of the date of filing of Form 24 must be obtained.
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5. Prepare Closure Documents.
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Prepare
Attachments to be attached in Form -24 as provided under the law, Further
Format of Application to Close is also attached.
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6. File LLP
Form 24
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The
documents along with LLP Form 24 (Download LLP Form 24) shall be filed with
the MCA to strike off name of LLP. The Registrar, where he has sufficient
cause to believe that the limited liability partnership has any asset or
liability, satisfy himself that sufficient provision has been made for the
realization of all amount due to the limited liability partnership and for
the payment or discharge of its liabilities and obligations by the limited
liability partnership , if found acceptable, the concerned Registrar of
Companies would cause a notice to be published on the MCA website announcing
the striking off of the LLP.
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7. Surrender
PAN of LLP
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On Receipt
of Certificate of striking off of the LLP, Authorized person should surrender
the PAN and TAN of the Limited Liability Partnership.
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Further, it is important to note
that the following shall be the attachments to e-Form 24:
·
Affidavit signed by the designated partners [as
per the format given sub clause (b) of clause (II) of sub rule (1A) to rule 37)];
·
Copy of the undertaking/ indemnity bond for
striking off name Indemnity bond
·
Copy of authority to make the application duly
signed by all the partners;
·
Copy of acknowledgement of latest ITR.
·
Consent of all the partners;
·
Consent of creditors is also needed to be filed.
·
Statements of accounts disclosing nil assets and
nil liabilities certified by a Chartered Accountant in practice made up to a
date not earlier than thirty days of the date of filing; and
·
Application disclosing the reasons for strike
off and the operative status of the Company.
FORMAT TO ISSUE A STATEMENT OF ASSETS AND LIABILITIES BY THE CHARTERED
ACCOUNTANT
In accordance with the provisions
of the LLP Act, 2009, there is no fixed format for statement of assets and
liabilities of an LLP. However, in general parlance, the auditors prepare the
accounts of the LLP as per the format of Form 8 and accordingly, the said
format shall be followed for preparing the said statement of assets and
liabilities.
FORMAT APPLICATION FOR CLOSURE OF LLP AS
PER RULE 37(1)(B)
Date
The Registrar of Companies,
_________________
Sub: Application For Closure of LLP As
Per rule 37(1)(b) Of The Limited Liability Partnership Rules,2009
Sir,
With
respect to the subject matter cited above, it is hereby submitted that LLP M/s
ABC LLP that is inoperative and has no intention to do any business or
commercial activity at all in future. Thus the LLP is defunct. You are
requested to strike off the name of the LLP under Rule 37(1) (b) of the Limited
Liability Partnership Rule, 2009.
Thanking You
Yours Truly
For ABC LLP
Authorized Signatory/Designated Partner
FORMAT AUTHORIZATION TO MAKE APPLICATION TO
STRIKE OFF
ABC LLP
(On the letter Head)
-------------------------------------------------------------------------------------------------------------------------------
To,
MMMM
Sub: Authorization to
make Application to Strike Off the Name of the LLP to ROC
Dear Sir,
With
respect to the subject matter cited above, the management decides to authorize
you to file an application to the ROC to strike off the name of the LLP from
their register.
An
application shall be moved with the required documents as follows:
1.
Application
Letter
2.
Consent of all
the partner,
3.
Indemnity bond/
undertaking
4.
Affidavit duly
notarized
5.
Copy of statement
of assets & liability duly certified
For ABC LLP
MMMMX
(Designated Partner)
NOW, WE SHALL DISCUSS THE IMPORTANT POINTS AFTER INTERPRETATION OF THE
RELEVANT RULE WITH RESPECT TO STRIKING OFF THE LLP:
1. Where the Limited Liability
Partnership is regulated under a special law, the application for removal of
name shall be accompanied by approval of the regulatory body constituted or established
under that law.
2. The contents of the notice
issued the ROC and the application made by the LLP shall be placed on the
website of the Ministry of Corporate Affairs for the information of the general
public for a period of one month.
3. As discussed, in case of
mandatory strike off, the Registrar shall send a notice to the LLP to give
reasonable opportunity of being heard as to why the LLP shall not be dissolved.
The correspondence of the said notice shall have to be made within a period of
one month or else the Registrar shall strike its name off the register, and
shall publish notice in the Official Gazette thereof.
4. The liability of the every
designated partner of the LLP dissolved as such shall continue and may be
enforced as if the LLP had not been dissolved.
As a Key Point : 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.
CS Annu Sharma is a Commerce Graduate and an Associate Member of the Institute of Company Secretaries of India (ICSI). She has cumulative experience of more than 3 years with Listed Company, CA and CS firms. She authored various articles on the topics of Corporate Laws, Securities Laws, DGFT, Income Tax, Start-ups among other. Articles authored by her are published on prominent Professional Websites.
Contact No . 7021848742
Email: csannusharma123@gmail.com
