FAQ ON LLP STRIKE OFF IN INDIA

When at any point of time the designated partners are unable to carry on the business or are is not carrying on the business for one or more than one year then the LLP can be make an application with the ROC, Ministry of corporate affairs for the closure. Let us discuss the questions on the LLP strike off:

1. What is Limited Liability Partnership?  

Limited Liability Partnership is the second form of corporate business form which is a separate legal entity and the liability of the partners is limited. The rights and liabilities of the partners are incorporated in the LLP agreement.

2.  How the LLP name be removed from the registrar?

There are two ways to close the LLP:

DECLARE LLP AS DEFUNCT: It happens when the LLP is inoperative for one year or more than one year

WINDING UP:

A. Voluntary winding up – You yourself can close the LLP and the LLP is inoperative for one year or more than one year

B. Mandatory winding up- That means that the department can issue the wound up notice to the LLP and the partners upon the following grounds:

  1. If for the period of more than 6 months and number of partners in LLP is less than 2
  2. LLP unable to pay debts
  3. LLP acted against the interest of the sovereignty and integrity of the India , laws and order of the state
  4. Default in filling with the Registrar the statement of accounts and solvency or annual returns for any five consecutive financial years
  5. Tribunal is of the opinion that it is just and equitable to wound up LLP

3.  What is the eligibility to file an application for strike off?

The following are the eligibility if the partners are planning for the LLP strikeoff:

  1. The operation ceases for one year or more
  2. Complied with LLP annual compliance for period up to its operation
  3. Closure of current account of the LLP
  4. Obtain the consent of the parties i.e any other authority, creditors, partners.

4. What are the documents required to file an application?

  1. Copy of consent of all partners (Mandatory)
  2. Copy of consent of all creditors (Mandatory)
  3. Copy of the undertaking/ indemnity bond for striking off name (Mandatory)
  4. Copy of statement of assets and liabilities duly certified as true and correct by auditor/ chartered accountant in practice (Mandatory)
  5. Copy of acknowledgement of latest Income tax return (Mandatory)

5.  What is the process of making an application?

In case the LLP is unable to carry on the business and the business is inoperative for a period of one year or more then the partners can make an application for the strike off and remove the name of the LLP from the register of companies by making an application in E-form 24 with the consent of all partners.  

After submitting an application the registrar will start his proceedings and if found any discrepancies or clarification will raise the objections in the application and upon receiving the objections the partners has to resubmit the application and give the presentation on each and every objection raised by the department within the stipulated time.

Upon receiving the clarification the department will re- scrutinise the application and after being satisfied will approve the application for being strike off.

6. If after resubmission sent by department, the same is not filled then what will be the consequences?

If the resubmission has been raised by the department and it has not be filled with the time limit the application will be rejected automatically and the partners has to start with the fresh process and new form will be filed by the partners.

7. How much time will it take to strike off the LLP?

Normally, it takes 6 months to 1 year to remove the name of the LLP from the registrar records.

07 Apr

Shruti Sharma
Shruti

“An idea can change your life”: Well it’s true! I am glad that India is rising its way towards startup culture. It has literally pushed people to at least give it a try and not just live in a bubble. Being an entrepreneur you need a team and Neusource is there to help you and to raise your startup.