LLP (Limited Liability Partnership) is a company where all partners(depending on the jurisdiction) have limited liabilities. Here, in an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence. It is one of the top choices for small and medium sized businesses due to its simplicity in functioning and limited liability to partners.
LLPclosing is either voluntary or compulsory.
- Voluntary closing of LLP:
An LLP closing can be commenced voluntarily or by a tribunal. If a LLP is to commenced voluntarily closing, the LLP must pass a resolution to close the LLP with approval of at least three-fourths of the total number of Partners. If the LLP has secured or unsecured lenders, then the lenders approval would also be required for closing of the LLP.
- Compulsory closing of LLP:
The reasons to close LLP compulsory could be,
- LLP may wants to dissolve, as it is unable to pay its debts
- There are less than two Partners from more than six months
- LLP has acted in a fraudulent manner or against the integrity and sovereignty of India
- The LLP has not filed financial statements for preceding five consecutive year.
- The LLP needs to passa resolution to close the LLP with approval of at least 3/4thof the total number of its partners.
- Copy of the resolution shall be filed with the Registrar within 30 days of passing the resolution
- An affidavit declaringthat the LLP has no debt or that it will be able to pay its debts in full within one year from the commencement of the closing, shall be made by the majority of its designated partners, being not less than two.
- The affidavit and form is to be submitted to the registrar within 15 days of the resolution.
- A consent regarding the dissolution of the LLPmust be given by at least 2/3rdof the value of creditor.
- Filing of creditors consent is a must.
- give notice of the resolution by advertisement in a newspaper circulating in the district where the registered office or the principal office of the LLP is situatedis to be given within 14 days of the receipt of creditors’ consent.
- Within 30 days of receiving creditors consent,appoint a liquidator within. This liquidator is to file a declaration.
- Submit the Final accounts of the LLP.
HOW EARLY CAN THE COMPANY FILE FOR THE CLOSING?
At least a year should have passed from the date of incorporation to file for closing of the company in LLP.
WHAT HAPPENS IF THE COMPANY DOES NOT COMPLY WITH THE TIMELINES?
a fine or penalty is incurred upon the Directors from starting another Company if the Company fails to comply with the timelines.
WHAT ARE THE KEY REQUIREMENTS TO FILE FOR VOLUNTARY CLOSING OF THE COMPANY IN LLP?
An approval from resolution of Directors to close the Company and declaring that there are no pending debts is a key requirement for filing the voluntary closing of the Company in LLP.
WHO SHOULD THE COMPANY NOTIFY IN CASE OF SUBMITTING AN APPLICATION OF CLOSING THE PRIVATE LIMITED COMPANY?
The Private Limited Company must notify the creditors, shareholders, employees, trustees, and other directors within 7 days of application submission