A limited liability partnership (LLP) is a type of business structure in which all partners share limited financial responsibilities. Typically, legal documents and terms are used to establish an LLP. The registration process for an LLP is clearly defined. Being a member of an LLP has some advantages, but like everything else, it also has some drawbacks. Additionally, an LLP must be closed through a number of steps. As a result, many people have difficulty figuring out how to register their LLP. However, the majority of them are unaware that an established procedure exists for the LLP’s closure.
The steps for closing an LLP are as follows:
- Declaring your LLP Defunct Any partner must file an application with the Registrar stating that the registered Limited Liability Partnership is no longer in business or is simply no longer in existence. According to Section 37(1)(b) of the Companies Act of 2013, the partners are required to submit an electronic Form 24.All of the documents listed on the form must be submitted with the form as a major requirement. An LLP’s name will be removed from the LLP’s register.
- Winding up your LLP There are two phases to the winding-up process, which involves the dissolution and winding up of an LLP.
The procedure for winding up an LLP is governed by Sections 63, 64, and 65 of the LLP Act of 2008. Again, you have two options for closing your LLP. There are two ways:
Voluntary winding up: When partners decide to stop the LLP and close it on their own. By passing a resolution with the approval of at least three-quarters of the partnership’s partners, an LLP can close on its own accord. Within 30 days of the resolution’s passage, a copy must be filed with the Registrar on Form 1.a copy of the authorization that was given to the person in charge during the process of closing an LLP.
In order to wind up with creditors, at least two partners from the majority must fill out Form 2 and state that they have no debts or that they will pay them off within a certain amount of time. within one year of the date the resolution for winding up was passed. At least two designated partners must sign this statement. Additionally, it must state that the LLP is not being wound up to defraud any individuals. The creditors’ dues can be paid before the declaration is filed.
Within 15 days of the passing of the resolution immediately preceding the passing of the resolution for winding up, verification of the declaration and statement must be filed on Form
3.The following documents must be filed:
(a) Form 4 must be used to submit a statement of assets or liabilities from the last date the accounts were prepared until the latest practicable date immediately prior to the declaration.
b) A report detailing the assets’ value, if any exist.
The LLP must receive all secured and unsecured creditors via registered mail, speed mail, email, or courier:
a copy of the declaration that was submitted on Form 2
(b) An offer to accept the claims and an estimate of the amount due.
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Within thirty days of receiving the declaration from the LLP, the Creditors are required to provide their opinion on the voluntary winding up.
Dissolution The Limited Liability Partnership liquidator will file a report on Form 9 detailing the winding-up process, including a final closing of accounts with explanations, and the disposition of the property, as soon as the LLP’s affairs are wound up, or when the assets have been liquidated and the liabilities have been discharged. The partners and creditors will then give their approval for the dissolution.
Whether in printed or electronic form, a resolution seeking approval must be distributed. Within thirty days of the publication, partners and creditors can request clarifications. Additionally, additional information may be requested, and it must be provided within thirty days of receipt.
After considering the report, if two thirds of the total number of partners or two thirds of the value of the creditors agree that the LLP should be wound up, then a resolution to dissolve the LLP must be passed within thirty days of receiving the report, the winding up accounts, and explanations for dissolution in the event of a meeting, or within thirty days of the distribution of the resolution or additional information, whichever comes first.
However, the LLP liquidator must submit a request for a decision to the National Company Law Tribunal if the required two-thirds vote to approve the report is not obtained.