Closure of Defunct LLP
An LLP is required to file certain mandatory returns whether it does the business or not. Non- filing of due returns will attract penalties and prosecution under the LLP Act and the designated partners are liable to face the same action. Cessation of operation cannot be a reason for non-filing of returns; an LLP continues to exist until its formal closure. An LLP being a separate legal entity registered under law, it is mandatory to be closed as stipulated under the LLP Act.
If the LLP is inactive, you have to formally close the LLP by filing an application to ROC. You can file Application for Closure of LLP to ROC subject to certain conditions.
A defunct LLP refers to an LLP that has never started business or is not carrying any business for the immediate past one year and has no assets and liabilities.
Conditions for Closure
An LLP fulfilling the following conditions can file an application for striking off its name from the Register of LLP.
- LLP should have filed all the due returns till the date / financial year in which it was carrying business.
- LLP should be inactive for a period of at least one year.
- LLP should not have any assets / liabilities as on date of application.
- The application for striking off the name should be submitted along with the required fee, consent of all partners, affidavits and indemnity by all designated partners, copy of the latest IT return and a Statement of Accounts not older than 30 days from the date of application certified by a Chartered Accountant.
Closing of Inoperative LLP
A defunct LLP can make an application to the Registrar for striking off its name from the register
FAQ Closure of Defunct LLP
1. What is a defunct LLP?
A defunct LLP indicates an LLP that has not started any business or is not carrying on any business for the immediate past one year and has no assets and liabilities.
2. How to close a defunct LLP?
A defunct LLP can be closed by making an application to the Registrar with the consent of all partners of the LLP for striking off its name from the register.
3. What are the conditions for filing an application for striking off a by a defunct LLP?
An LLP fulfilling the following conditions can file an application for striking off its name from the Register of LLP.
- It should have a PAN
- It should be inoperative for a period of at least one year
- It should not have any assets / liabilities as on date of application.
- It should not have any bank account live as on date of application.
4. How to file the application for striking off the name by a defunct LLP?
Application for striking off the name by a defunct LLP should be submitted to the concerned Registrar along with:
- required fee
- consent of all partners
- affidavits and indemnity by all designated partners
- copy of the latest IT return and
- a Statement of Accounts not older than 30 days from the date of application certified by a Chartered Accountant.
5. My LLP has done a little business in the last year. Can it be closed?
The LLP can be closed if the LLP is inoperative from the date of incorporation or inactive for a period of at least one year immediately preceding the filing of the application.
6. Who has to sign the application for closure of defunct LLP?
The designated partners have to sign the application for closure of defunct LLP with the consent of all the partners. Also the designated partners are required to execute affidavits and indemnity as stipulated under LLP Rules.
7.Should all the partners consent in order to close the LLP?
Yes. Consent of all the partners is required to file the application for closure of defunct LLP.
8.There are few assets and Balance in bank account. Can it be closed?
If there are assets and balance in bank account, the LLP cannot be closed as defunct.
9.Will the Registrar issue a certificate after closure of LLP?
No. Registrar will not issue a certificate for closure of LLP. After scrutiny of application, the Registrar will approve the application form. The status of LLP will be changed to ‘under the process of striking off’.
10.What is the process after filing the application? How long it will take to actually strike off the LLP name?
Depending on the Registrar’s office, the whole process may take 3 to 6 months to complete. After approval of the application, the details will be placed on the website of the Ministry of Corporate Affairs for the information of the general public for a period of one month.
After the expiry of one month from placing the details in MCA website, the Registrar will issue an order for striking off the LLP name from the register and shall publish notice in the Official Gazette. After the notice is published in the Official Gazette, the LLP shall stand dissolved.