Closure of Limited Liability Partnership (LLP)

Last Updated On: Dec. 2, 2021, 9:24 p.m.


A Limited Liability Partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, some or all partners have a form of limited liability similar to that of the shareholders of a corporation. Unlike corporate shareholders, the partners have the right to manage the business directly. Lets us discuss its concept, closure and related provisions in depth.



What are the documents required 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.



What are the different ways in which an LLP can be closed?

The following ways LLP can close its business:

1) Winding up of LLP

Section 63, 64 and 65 of LLP Act 2008 governs the process for winding up of the LLP. It is the process where all the assets of the business are disposed off to meet the liabilities of the same and surplus any, is distributed among the owners. The LLP Act 2008 provides for following two modes for winding up the LLP i.e.:

I)  Voluntary winding up

II) Compulsory winding up

a. Voluntary Winding up : Under this, the partners may between themselves decide to stop and wound up the operations of the LLP.

b. Compulsory winding up – A limited liability partnership may be compulsorily wound up by the Tribunal,—

  • if the limited liability partnership decides that limited liability partnership be wound up by the Tribunal;
  • if, for a period of more than six months, the number of partners of the limited liability partnership is reduced below two;
  • if the limited liability partnership is unable to pay its debts;
  • if the limited liability partnership has acted against the interests of the sovereignty and integrity of India, the security of the State or public order;
  • if the limited liability partnership has made a default in filing with the Registrar the Statement of Account and Solvency or annual return for any five consecutive financial years; or

if the Tribunal is of the opinion that it is just and equitable that the limited liability partnership be wound up.


What is declaring the LLP as Defunct mean?

In case the LLP wants to close down its business or where it is not carrying on any business operations for the period of one year or more, it can make an application to the Registrar for declaring the LLP as defunct and removing the name of the LLP from its register of LLP’s.

E- Form 24 is required to be filed for striking off the name of LLP under clause (b) of sub rule 1 of Rule 37 of LLP Rules 2008. Similarly, Registrar also has the power to strike off any defunct LLP after satisfying himself of the need to strike off and has reasonable cause. However, in this case, registrar has to send a notice to the LLP of his intention and request to send their representation within one month from the date of the notice. The Registrar shall publish such notice or content of the application made by the LLP on its website for a period of one month for the information of the general public. In case no reply is received within the mentioned period, registrar may strike off the name of LLP.



Lets first understand documents required for closing LLP as an defunct

  • Affidavit by all the Partners
  • Application for Closure of Limited Liability Partnership (LLP)
  • Authorisation Letter
  • Consent of all partner
  • Declaration by all partner
  • Indemnity bond by all partner
  • Statement of accounts
  • Income tax return



The Process to close an LLP as an Defunct are as follows: –

  • A meeting of all the designated and Partner of Limited Liability Partnership (LLP) shall be called in with agenda in notice.
  • Consideration both the conditions that LLP is inoperative since incorporation or does have any business transaction in last one (1) year as well as no assets or liabilities are pending in the meeting.
  • Taking approval from all the partners of the LLP.
  • Preparation of all the documents for closure of LLP.
  • Filling of form to respective state, ROC.

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