Due to its benefits, the LLP (Limited Liability Partnership) is one of India's most popular legal entities. However, it becomes equally difficult to maintain and close a business if the owners are unaware of the technicalities. In this article, we'll look at some of the technical and monetary aspects of LLP Termination.
An LLP is principally closed due to several reasons. Maintaining Terminate an LLP sometimes becomes compelling in the face of maintenance of compliance costs, legal penalties, hiring chartered accountants, company secretaries, etc. Some startups began with an idea, but discovered their concepts were not profitable, and they wished to close the LLP. Or maybe, for a long time, there has been no business activity in the firm; partners are unwilling to continue the partnership or business. Following the loss of a partner, the other wants to close the business or lastly due to unforeseen circumstances, if the Courts issue an order to shut down. In all such circumstances the owners shall be acquainted with the cost and procedure of an LLP Termination.
LLP Costs and Other Requirements
If you do not intend to file the return and close the LLP for any reason, the LLP must be closed in accordance with the LLP Act. When it comes to LLP registration of Termination, Vakilsearch showcases a remarkable and efficient reputation.
The approximate costs to Terminate an LLP are around 5-10,000, assuming all filings are completed. This includes drafting charges for applications, filing charges, preparing affidavits, statement of assets and liabilities, surrender of documents and all other compliances.
The government fees for filing Form 24 is 500. The penalty for LLPs defaulting in filing of any statutory return is Rs.100 per day, without any maximum limit.
There are two conditions Terminate an LLP
- The limited liability partnership should have been dormant for at least a year, or it should have been inactive since its inception.
- The second stipulation is that the LLP Termination must be debt-free at the time of application. Furthermore, there is extensive paperwork to complete. The first step is to submit the application, along with the requisite fees and an affidavit, as well as consent from all LLP partners.
- The Termination of an LLP can take up to two months if the partners are diligent in completing the necessary procedures.
Procedure for closing terminate an LLP
A brief idea of the process, similar to company registration in India, involves filing a resolution and filing Form No. 1 with the Ministry of Corporate Affairs (MCA). A statement of assets and liabilities of the firm needs to be submitted along with a final account statement. An advertisement is given out in the local newspaper for authorization by the creditors. Finally, the partners shall submit a declaration along with Form 24, after which the registrar will upload it on the website and declare the LLP closed or terminated.
Documents Required for LLP
Pan Card of partners, Aadhar Card of Partners, Latest address proof of partners and a consent letter signed by all partners to LLP Termination.
Some checkpoints
- All the pending compliances related to filings of LLP shall be complete. The LLP should file all the overdue returns in Form-8 and Form 11, if any. Also check that LLP Agreement has been filed in LLP-3 with ROC
- Ensure that all the statutory dues due to any statutory authority are cleared.
- All the liabilities must be paid off and if any liabilities remain due then a NOC from the creditors is required.
- The bank account of the LLP shall be closed and a letter of Termination shall be taken from the bank evidencing the Termination of the bank account.
For more legal information to LLP Termination, visit us at Vakilsearch!
