Limited Liability Partnerships (LLP) in India are closed or winded up either voluntarily or by compulsion. To successfully strike off an LLP, the prescribed rules of annual filings apply. This article explains all about annual filing during LLP closures.
An LLP has to follow certain compliances even if the firm is non-operative. To get freed from such compliances, it is better to close the inoperative LLP. Closure of LLPs in India takes place when a business does not carry out operations since its operation or ceases to carry on business for a period of more than a year. To strike off the name of the LLP, you can apply to the Registrar of Companies (RoC).
The striking-off of an LLP happens through the LLP Form 24 which was introduced by the Ministry of Corporate Affairs (MCA) in the Limited Liability Partnership Rules, 2009 via an amendment.
Pre-requirements for the Closure of LLP
As per the rules laid by the ministry, there are certain criteria the application for LLP closure is subject to. Such pre-requirements that are to be made sure of include:
- Paying off all outstanding liabilities of the LLP
- Closing off all the bank accounts of the LLP and obtaining a certificate for the same
- Filing of Forms 8 and 11 until the end of the financial year in which the LLP ceased to carry its business has been
- Filing of the latest income tax return, that is IT of the last working financial year.
Documents Required for the Closure of LLP
Apart from the aforementioned details, and actions, the following documents shall be needed to apply for the closure of LLP:
- Copy of PAN card of all the designated partners
- Aadhar card copy of all the designated partners
- The LLP agreement copy, if available, or the date of becoming a partner in the LLP
- The complete address of all the designated partners
- A statement certified by a practicing chartered accountant depicting that the LLP has nil assets and liabilities.
What Is the Purpose of Form 11 and Form 8?
- Form 11 is a statement of annual return. Every LLP is required to submit Form 11 to the RoC within 60 days from the closure of the financial year. In other words, Annual Returns are to be filed on or before May 30, every year.
- Every LLP has to prepare and close the account for the financial year. Form 8 has to be filed by any two designated partners with the RoC within 30days after the completion of six months of the financial year. In other words, it has to be filed by 30 October every year.
- These forms are to be filed as per the prescribed dates. Filing these forms after the due date may entail a penalty of ₹100 per day of default.
Is an Updated Annual Filing Necessary for the Closure of an LLP?
Limited Liability Partnerships are treated as separate legal entities. Therefore all the designated partners are responsible to maintain proper books of accounts, and also filing the annual return with the MCA for each financial year. Form 8, Form 11, and Income Tax Returns are the most important annual compliances of the LLP.
The LLP Amendment Rules, 2017 demand the up-to-date filing of annual forms Form 8 and Form 11. This means even for the inactive period, you have to file these annual forms.
The Forms have to be filed up to the date of the financial year when the LLP ceased to carry on operations or the business. For example, if the LLP stopped operating on July 31, 2021, then Forms 8 and 11 need to be filed up to the Financial Year 2021-2022.
What Is the Procedure to Strike off an LLP?
To give closure to your LLP, the following steps are to be followed:
- Close the bank accounts associated with the LLP
- Sell all assets and pay off all liabilities of the LLP, if any
- Get the written consent of all the partners to agree to go ahead with the strike-off
- Draft the necessary documents and file form 24 with the concerned judicial registrar.
The documents and the forms are then reviewed by the Registrar. The LLP may be required to submit any other documents as demanded by the Registrar. Once satisfied with the form and the documents, the registrar will send the name of the LLP to be published in the Official Gazette to look for any objections from the general public. If there are no objections, the registrar will strike off the LLP’s name from its register.
The Final Verdict
For successful closure of the LLP, it is a must to submit all the necessary documents, and file all the necessary forms properly. Failure to do so may incur huge penalties that can go up to ₹5 lakhs. You can seek the services of professional experts like Vakilsearch to get your LLP a proper, and legal closure. Vakilsearch can make this cumbersome process easy and speedy for you, at the most affordable price.