LLP (Limited Liability Partnership) is one of the most popular legal entity in India due to its feature. In simple words, it’s a mixture of the partnership firm and private limited company. Even in the last some years, it’s one of the most popular legal entity over the partnership firm. But sometimes there are of the reason faced by the Indian entrepreneur so they want to close the LLP so Today we talk about “ How to Close an LLP in India: Procedure for winding up LLP”.
Reason to Close the Winding-up LLP (Limited Liability Partnership) in India –
- Some Startups just started with the idea but after the testing their ideas there is no profitability so they want to close the LLP.
- There is no business activity for a long time.
- Partners are not willing to continue the business or partnership.
- If the LLP is Registered for any specified project and it has been completed.
- LLP has become bankrupt.
- Only one partner is remained after the death of the partner and wants to close the business.
- By the Court order due to any circumstances.
So above are the main reason for the Close an LLP in India. If any entrepreneur facing these issue after the registration then they are tried to close winding-up LLP so at least they can’t afford the legal penalties or compliance every year. Even they have to bear the huge professional for the maintenance through the chartered accountants or company secretary so the best is always close to an LLP if you face above any kind of the reason.
7 Major Steps to Close an LLP in India
Step 1 – Pass a Resolution –
Once you decide the Close an LLP in India then you have to pass a resolution by the at least 3/4th of the Partners.
Step 2 – Form 1 Filings –
After the passing of a resolution, you have to file form 1 with the resolution copy within the 30 days.
Step 3 – Declaration of the Debt
In the third step LLP have to make a declaration that LLP has no debt liability or if have any then it will have sufficient amount so they can be paid within the 1 year from the commencement of the winding up. Its has prepared by the majority of the partners (minimum 2).
Step 4 – Form 4 & Value of the Assets
In the fourth step, the above forms an affidavit has been submitted to the registrar within 15 days of the resolution along with the forms and a statement saying that such winding up is not being done to defraud anyone, form no .4 and a report of the value of the assets of the LLP. You can read here about the Annual Compliance for the LLP which also included these Forms.
Step 5 – Obtain consent from the Creditors
In the fifth step if you have the creditors in your LLP then you have to obtain the consent from the creditors and it’s given by at least ⅔ of the unpaid creditors.
Step 6 – Filings and Appointment of Liquidator
File the consent from the creditors with the appropriate timelines. You have to provide advertisement also in the local newspaper within 14 days from the receiving creditor’s consent.
In case the LLP has liability increasing and assets the appointment of a liquidator is required and a liquidator’s statement in form 6 needs to be filed.
Step 7:- Finalization of the Accounts of LLP.
In the sixth step, you have to prepare the finalization of the accounts and submit along with the form 9. So once form 9 has been filed, all the formalities have been completed.
So this is the simple procedure to Close an LLP in India. Hope you like this article. If you have any Query regarding the Closure of the LLP then just place a request on myonlineca and get legal solutions at your fingertips.