Closure of Inactive LLP
An inactive LLP can make an application to the Registrar with the consent of all Designated partners for striking off its name from the register. Our dedicated team will help you with all the documentation. We extend our support from documentation to preparation and filing.
Closure of Inactive LLP In India
LLP is a legal entity separate from its partners and formed under the Limited Liability Partnership Act, 2008. LLP continues to exist until its formal closure filed as stipulated under the LLP Act.
LLP is required to file annual returns, whether it does the business or not. Non- filing of due returns will attract penalties and prosecution under the Limited Liability Partnership Act, 2008 and all the designated partners are liable for the consequences. Cessation of operation can not be a reason for non-filing of returns. It is mandatory to close the LLP to be free from compliance burden & Move on in Life.
Reasons for dissolution of LLP in India
- To avoid compliance and filing responsibilities
As per provisions of Limited Liability Partnership Act, 2008, Every LLP (Limited Liability Partnership) is required to file annual returns for each financial year, whether it does the business or not. Cessation of operation can not be a reason for non-filing of returns. If the LLP is inactive, it’s better to wind up than fulfill the compliance and avoid the yearly compliance burden.
- To avoid fines and penalty for late filing
Non-filing of annual returns will attract penalties and prosecution under the LLP Act, 2008. The penalty for non-filing of Annual Return is Rs 100 per day and the penalty for non-filing of Income-tax return the LLP is punishable with a fine of Rs. 25,000 as a minimum which can go up to Rs. 5,00,000 and each designated partner is punished with a minimum fine of Rs. 10,000 which can go up to Rs. 1,00,000.
LLP Closure - Requirement
The closure of LLP can be done only with the process prescribed under law. Section 63 of the LLP Act provides that an LLP can be closed
- Voluntarily or
- By NCLT upon an application moved by the LLP or The ROC.
The rules made for closure provides an easy method of closing of an LLP that is inactive by filing an application in Form 24. However, only if the following conditions are satisfied;
- That the LLP has never started its operations or
- That the LLP does start the business or is not carrying any business for the immediate past one year
- That all taxes and returns have been filed
- That there is no Assets or Liabilities in the LLP
- That in case there are assets or liabilities then the same is settled before application of closure is filed
An LLP fulfilling the following conditions can make an application to Registrar for striking off its name from the Register of LLP.
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FREQUENTLY ASKED QUESTIONS
A defunct LLP means an LLP that has never started any business or is not carrying on any business activity for the immediate past one year.
LLP can be closed if it is inactive for a period of one year immediately preceding the filing of the application. In your case, you have to wait for the one year from the date of last business transaction.
Any of the designated partners can digitally sign the e-form 24 for the closure of the LLP with the consent of all partners. However, all the designated partners are required to execute indemnity and affidavits as stipulated under LLP Rules.
Yes, consent of all the partners is required to make the closure application.
If there are assets and balance in the bank account, the LLP cannot be closed as defunct. There should be no Assets or Liabilities in the LLP.
No. Registrar will not issue a certificate for the closure of LLP. After scrutiny of the application, the Registrar will approve the application form. The status of LLP will be changed to ‘under the process of striking off’ and then defunct.
Depending on the Registrar’s office, the whole process may take 3 to 6 months to complete. After approval of the application, details will be placed on the Ministry of Corporate Affairs portal for the information of the general public for a period of one month. After the expiry of one month, the Registrar will issue an order for striking off the LLP.
No, at least one year must have elapsed before closing an LLP voluntarily.
No, all overdue (Form 8 & Form 11) returns should be filed for each financial year in which the LLP is active and carrying business.
No such attachment or proof is required if there is no bank account for LLP. However, designated Partners give a declaration in the affidavit for the same.
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