Does the death of a designated partner result in the winding up or strike off of an LLP by the registrar? Let’s find out.
If a designated partner dies or resigns from an LLP, the LLP will not be affected; however, if a partner dies or resigns from a partnership company, the partnership will most likely be dissolved. The key aspect of an LLP is perpetual succession, which means that the LLP will continue to exist indefinitely regardless of whether the partners leave or come. This distinguishes LLP as a separate legal entity from its partners. LLPs have their own rights, such as possessing property, entering into contracts, and investing. Therefore we can be sure that the Registrar will not strike off an LLP just because a designated partner has passed away.
Pre-conditions to Strike off an LLP
Pre-requisites for striking off a limited liability partnership are:
- Not carrying on any business or operation since incorporation or for a period of one year or more (i.e., if the LLP is operational and the partners want to close it, the LLP must first cease all commercial activity)
- Consent of all limited liability partnership partners to strike off the LLP’s name from the register
- Submission late Form 8 and Form 11 returns up to the end of the fiscal year in which the limited liability partnership ceased to engage in business or commercial operations before filing Form 24
- There should be no creditors on the date the application for striking off is filed
- The LLP should not have created any bank accounts, and if it did, such accounts must be closed as of the day the application for striking off is filed.
Procedure to Strike off an Designated Partner in LLP
If an LLP intends to close down its business or is not carrying on any business operations for a year or longer, it can apply to the Registrar of Companies to have the firm declared defunct and the name of the LLP removed from its register of LLPs. With the approval of all partners, the registrar or the LLP can strike off company of the LLP in e-Form 24.
Following receipt of the application, the registrar will notify the Limited Liability Partnership and all of its partners of his intention to remove the LLP’s name from the register and request that they submit their representations, along with copies of any relevant documents, within 30 days of the notice’s date.
If no unfavourable representations from LLP partners or the general public are received by the end of the time specified in the notification, the registrar may strike the LLP name from the register and publish a notice in the official gazette.
Closing an LLP – Death of Designated Partner
In India, there are seven major steps to closing an LLP.
Step 1: First, pass a resolution.
Step 2: Form 1 Filings
Step 3: Debt Declaration
Step 3: Debt Declaration
Step 5: Get the creditors’ permission.
Step 6 : Filings and Liquidator Appointment
Step 7: LLP Accounts Finalization
Winding Up an LLP
If an LLP registration intends to close down its business or if it has not carried on any commercial operations for a year or longer, it can apply to the Registrar to have the LLP declared defunct and the name of the LLP removed from the register of LLPs. In the eyes of the law, a limited liability partnership that does not begin or continue its business operations for a set amount of time becomes inactive, and its name is struck off the register.
The following situations result in the dissolution of an LLP:
- One or more partners die or go bankrupt
- By court order / mandatory judicial decision
| The default penalty for LLPs failing to file any statutory filing return in the winding-up or dissolution process is ₹100 per day, with no maximum limit. The alternative for winding up dormant LLPs is preferable because there is no need to file LLP Form 11 or LLP Form 8, nor to file an Income Tax Return for the LLP every financial year to preserve compliance and avoid costly penalties. |
Obligations of an LLP Before Applying for Striking off Its Name
As per Rule 37(1A), a limited liability partnership shall file incomplete returns in Forms 8 and 11 up to the end of the financial year in which the limited liability partnership ceased to carry on its business or commercial operations before filing Form 24, similar to the process followed during the registration of a company.
Get Vakilsearch Assitance for Applying for Striking off Its Name
Prior to the implementation of the Limited Liability Partnership (Amendment) Rules in 2017, dissolving an LLP was a lengthy and difficult process. The procedure has been made easier and simpler with the introduction of LLP Form 24. Get in touch with our experts today for a free consultation! Our veteran professionals will ensure compliant striking off of your LLP name from the books.
