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We ensure perfect customer satisfaction and timely delivery of services by team of qualified expert team and Chartered Accountants. With Startup Club India, you will get your LLP closed after getting approval from ministry of corporate affairs and other required departments.
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Close the LLP

An Overview - Winding up of LLP

A business may be forced to close for a variety of reasons, including non-operation, business closure, repeated losses, the death of a key managerial person, a conflict among promoters, or the LLP's inability to pay its debts. Closing or winding up an LLP is a difficult operation, as the designated partners and all partners must first decide on the most appropriate way of winding up the LLP under the LLP Act, 2008.

If the LLP does not have any responsibilities or debts to pay, it can be closed voluntarily through a majority agreement of all of the LLP's partners, followed by an application to the registrar to strike the LLP's name from the register. However, if the LLP has unpaid debts or creditors/liabilities, the LLP must seek closure through the National Company Law Tribunal.

We ensure perfect customer satisfaction and timely delivery of services by team of qualified expert team and Chartered Accountants. With Startup Club India, you will get your LLP closed after getting approval from ministry of corporate affairs and other required departments.

Documents required to Close the LLP

In order to close or wind up the LLP, the partners need to submit the following documents:-

  • All Partners must agree to the filing of the application for the LLP's closure.
  • All designated partners must write a statement of fact and an indemnity bond pledging to indemnify - any responsibility that may occur after the name has been wiped out of the Registrar's database.
  • A copy of the LLP's most recent income tax return and financial statements, if the LLP is conducting business and has filed returns.
  • A letter confirming that the LLP is not liable or obligated to pay any creditors.
  • IT returns for the previous fiscal year are filed without penalty.
  • Copies of all designated partners' PAN cards.
  • Aadhaar proof for all partners and designated partners (scanned copy).
  • A copy of the LLP agreement, if available, or the date of partnership.
  • The permanent mailing address for all selected partners and associates.

Pre-conditions to be fulfilled for Winding up of LLP

The Limited Liability Partnership needs to meet some conditions for winding up. Consider following points:-

  • The LLP's business or commercial operations must have ceased for a period of one year or longer.
  • A statement of account indicating zero assets and liabilities made to the date of filing and not earlier than thirty days prior to the date of filing should be submitted, which must be certified by a Chartered Accountant.
  • The LLP must not be in possession of any liabilities or assets.
  • The LLP's bank account must be inactive. If a bank account was opened, it must be closed and a statement or certificate from the bank attesting to the account's closure must be produced.

Procedure for winding up of LLP in India

The following is a step-by-step procedure:

  • 1

    Adopt a resolution authorising the winding up of the firm with the approval of three-fourths of the total number of partners.

  • 2

    Submit a copy of the Resolution to the registrar in Form No. 1 within 30 days.

  • 3

    Declaration of Solvency

    A declaration of solvency must be made in Form No. 2 by a majority of designated partners, accompanied by an affidavit stating that the LLP is capable of paying its debts or will be able to do so within one year of the commencement of winding up. Declarations must include the following:
    • Include a statement that the LLP was not formed with the intent of defrauding any person or persons.
    • Accompanied by a Statement of Assets and Liabilities in Form No. 4 for the period ending on the date the accounts are prepared, fully attested by two authorised partners.
    • Accompanied with a report of asset valuation prepared by a valuer.
  • 4

    Within 15 days after the resolution's passage, the declaration must be filed with the registrar in Form No. 3.

  • 5

    Clearance from Creditors

    Obtain clearance from Creditors (Secured and Unsecured) for winding up and send them a copy of the above-mentioned declaration along with the amount owed to each creditor and an offer for acceptance.

    Creditors shall provide their consent or opinion within 30 days of receipt of the declaration, unless Creditors representing two-thirds of the total value of the declaration provide consent that-
    • In the interest of Creditors and Partners, the LLP should be wound up by Partners.
    • If the LLP is unable to repay its debts through the sale of its assets in winding up and creditors recommend that the LLP be wound up, the LLP will be wound up by creditors.
    • If the LLP is unable to repay its debts through the sale of its assets in winding up and proposes to be wound up by the Tribunal, the LLP will be wound up by the Tribunal and an application for the same must be submitted with the Tribunal within fourteen days.
  • 6

    Within 15 days of receiving creditors' consent, the Declaration must be filed with the registrar in Form No. 5.

  • 7

    Within 14 days of getting creditor consent, a notice of voluntary winding up must be published in a newspaper.

  • 8

    Such newspaper must be circulating in the district in which the LLP's registered/principal office is located.

  • 9

    Appointment of Liquidator

    Within 30 days of
    - Adoption of a resolution in the absence of creditors; or
    - Obtaining creditors' consent

    Although partners appoint the liquidator, if the approval of two-thirds of creditors is not obtained, creditors may nominate another liquidator and fix the compensation, and the liquidator appointed by the creditors will be the liquidator.

    However, if creditors do not consent to or select another liquidator, the liquidator appointed by the partners is assumed to be the liquidator. Additionally, the Tribunal may appoint the liquidator and establish the liquidator's compensation. The tribunal has the ability to remove the liquidator following a sufficient opportunity for hearing.

    Following his appointment, the Liquidator is required to file Form No. 6, declaring any conflict of interest or lack of independence to partners or creditors, if applicable.
  • 10

    The liquidator is responsible for settling the creditors' or partners' list, maintaining books and records of accounts, paying debts, and distributing assets among the partners.

  • 11

    The liquidator shall report to the partners or creditors quarterly (on the 31st March, 30th June, 30th September, and 31st December) on the status of the winding up in Form No. 8.

  • 12

    Upon the liquidation of the LLP's assets and affairs, the liquidator shall provide the partners and creditors with a report in Form No.9 detailing the assets and debts that have been disposed of.

  • 13

    Within 30 days of receipt of the liquidator's report, two-thirds of the total number of partners or total value of creditors, as applicable, must approve the winding up.

  • 14

    The liquidator shall deliver to the registrar and to the tribunal a final copy of the accounts and report in Form No. 10.

FAQs on Winding up of LLP

A corporate business vehicle that enables the combination and operation of professional expertise and entrepreneurial initiative in a flexible, innovative, and efficient manner, while providing the benefits of limited liability and allowing members to organise their internal structure as a partnership.
Detailed steps for winding of LLP are mentioned above. You can hire Startup Club India for seamlessly winding up of LLP at effective cost.
It takes at least 2 months to close or wind up an LLP.
An LLP can be charged with penalties if it fails to furnish the returns. Partners are also liable for the same default.

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