Ministry of Corporate Affairs (MCA) vide notification dated 16th May, 2017 has relaxed the rules for filing the application for closure of defunct LLP.
As per the notification, a Limited Liability Partnership (LLP) which is not carrying on any business or operation for a period of one year or more can make an application to the Registrar with the consent of all partners of the LLP for striking off the name of LLP from the MCA Register without filing the overdue returns in Form 8 and 11 subject to certain condtions.
The LLP shall have to file overdue returns in Form 8 and Form 11 up to the end of the financial year in which the LLP ceased to carry on its business or commercial operations before filing.
REQUIREMENTS OF CLOSURE AS A DEFUNCT LLP
- LLP should not have carried on its business or commercial operations for a period of one year or more.
- A statement of account disclosing nil assets and nil liabilities made up to a date not earlier than thirty days of the date of filing certified by a Chartered Accountant should be submitted.
- LLP should not have any liabilities and assets.
- LLP should not have any active Bank Account. In case the Bank account was opened, the same must be closed and a certificate(s) or statement from bank stating the closure of Bank Account to be provided.
- All the Partners should consent for filing the application.
- All Designated partners shall have to execute an affidavit and Indemnity Bond agreeing to indemnify any liability that may arise after striking off its name from the Register.
- Copy of the latest Income-tax return filed by the LLP, if the LLP has carried out any business and has filed such return.
In case the LLP has not filed the initial LLP Agreement with the Registrar, a copy of the initial LLP agreement, along with changes thereof must be furnished to the Registrar in cases where the LLP has not commenced business or commercial operations since its incorporation.
For this purpose, ‘the date of cessation of commercial operation’ is the date from which the LLP ceased to carry on its revenue generating business. The transactions such as receipt of money from debtors or payment of money to creditors, after such cessation will not form part of revenue generating business.
Prior to the notification, the office of Registrar of Companies used to insist the filing of all the overdue returns such as Form 8 and 11 as pre-condition for filing the application for closure. Filing overdue returns for the past years involves payment of Lakhs of Rupees as additional fee and penalties. This notification is a great relief to the entrepreneurs who have started their venture as LLP and has not started the business operations or those who have stopped the business due to various reasons.