LLP is one of the forms of business organisations, which is treated as body corporate. LLP is more than a partnership firm and less than a Company. It is a hybrid of Partnership Firm and Company type of business organisation.
2. MODES OF STRIKE OFF OF LLP AND RELEVANT PROVISIONS OF LLP ACT, 2008:
The process for strike-off of LLP is detailed under Section 75 of the Limited Liability Partnership Act, 2008 read with Rule 37 of Limited Liability Partnerships Rules, 2009.
An LLP can be struck from the Registrar of Companies (ROC) through two modes as below:
A. COMPULSORY STRIKE – OFF [Rule 37 (1) (a)]:
The ROC may, suo-moto, issue notice of Strike off to LLP and its partners, where he has reasonable cause to believe that LLP is not carrying on any business operation for a period of two years or more. The ROC shall give reasonable opportunity to LLP and its partners to submit their representations along with the copies of relevant documents, if any, within a period of one month from the date of the notice.
B. VOLUNTARY STRIKE-OFF [Rule 37 (1) (b)]:
An LLP may make an application to the Registrar of Companies for strike off of its name from register of ROC in LLP Form 24.
An application can be made: 1) if it has completed at least one year since date of incorporation in the case where it has ceased from operation since incorporation or 2) From the date of cessation of business activities or commercial operations.
Here, the effective date of cessation of business activities or commercial operations is the date from which LLP ceased to carry on its revenue generating business and the transactions such as receipt of money from debtors or payment of money to creditors, subsequent to such cessation will not form part of revenue generating business.
a. PRE-REQUISITES/CONDITIONS FOR MAKING APPLICATION FOR STRIKE-OFF:
An LLP before making application to ROC, it shall comply the following pre-requisites/conditions:
a. It shall not be carrying any business activities since one year before making application.
b. If LLP is inoperative since incorporation, then it should have completed one year since incorporation as on the date of making application.
c. The LLP shall have filed all its overdue returns or filings with ROC for the period up to which LLP does not have any operations.
d. There shall be no pending or undergoing investigation/prosecution/ inspection against LLP.
e. There shall be no pending disputes between the partners in any court of law.
f. There shall be no unsatisfied charges against LLP.
g. There shall be no bank account existing in the name of LLP as on date of making application.
h. If LLP is regulated by any regulatory authority, NOC for closure must be obtained.
b. LLP FORM 24:
An LLP may make an application for voluntary strike-off in Form LLP 24 [Application for striking off name of Limited Liability Partnership (LLP)], which is a web-based form available in MCA V3 portal.
c. MANDATORY ATTACHMENTS TO FORM LLP 24:
The below mentioned are the mandatory attachments that are to be made to LLP Form 24:
a. A statement of account disclosing Nil assets and Nil liabilities, certified by a Chartered Accountant in practice made up to a date not earlier than thirty days of the date of filing of Form LLP 24.
b. An affidavit signed by the designated partners, either jointly or severally, to the effect,-
i. That the Limited Liability Partnership has not commenced business or where it has commenced business and ceased to carry on such business from ………….(dd/mm/yyyy);
ii. That the limited liability partnership has no liabilities and indemnifying any liability that may arise even after striking off its name from the Register;
iii. That the Limited Liability Partnership has not opened any Bank Account and where it had opened, the said bank account has since been closed together with certificate(s) or statement from the respective bank demonstrating closure of Bank Account;
iv. That the Limited Liability Partnership has not filed any Income-tax return, where it has not carried on any business since its incorporation, if applicable.
c. A copy of the acknowledgment of the latest Income-tax return filed under the Income-tax Act, 1961 (43 of 1961) and the rules made thereunder for the time being in force, where the LLP has carried out any business and has filed such return.
d. Copy of the Initial LLP agreement, if entered into and not filed, along with changes thereof in cases where the LLP has not commenced business or commercial operations since its incorporation.
e. Indemnity Bond from all the designated partners of the LLP to the effect to pay and settle all lawful claims arising in future after the striking off the name of the LLP including which have not come to their notice at the time of making application and to indemnify any person for any such losses that may arise pursuant to striking off the name of the LLP.
f. The resolution of the Partners of the LLP in their meeting approving the proposal to strike off the name of the LLP and make application in this regard.
g. A letter of authorization by the LLP giving authorization to any of the designated partners of the LLP to make application to ROC.
d. REPLY TO CLARIFICATION SOUGHT FOR CLOSURE:
If the ROC needs any clarifications from LLP, it may seek further clarification from LLP as required.
3. FREQUENTLY ASKED QUESTIONS (FAQ’S):
1) Can an LLP make application for strike-off within 6 months of its incorporation?
No. An application for strike-off can be made only if it has completed at least one year without any business activities.
2) If an LLP has received the notice of strike-off under rule 37 (1) (a) – Compulsory strike off, can it make an application for voluntary strike-off?
Yes. An LLP may make an application for voluntary strike-off provided, it has justified and submitted all the clarifications that have been sought by the ROC in their notice within reasonable time and the ROC after been satisfied with the clarifications may initiate action for suspension of strike-off proceedings.
3) Whether mandatory partner’s approval is required for making application for strike-off or the approval of designated partners will suffice?
As per LLP Act, 2008 and the rules made thereunder, there is no specific condition with regard to mandatory partner’s approval. The approval depends on the clauses of the LLP agreement. If the LLP agreement does not have any clause for approval by the partners of the LLP for closure, even though it is not mandatory, it is suggested to take approval from the partners of the LLP as a better diligence.
4) Can a struck-off LLP be re-instated?
Yes. If any partner or creditor is aggrieved by the LLP having been struck off, an application to the Tribunal can be made before the expiry of five years from the date of publication in the official gazette by the ROC.
The Tribunal may, if satisfied with the application for restoration of the LLP, order the ROC to restore the LLP.