LLP Strike off

LLP Strike Off, also known as "removal of name from the Register of LLPs," is a simplified process for closing down a Limited Liability Partnership that is no longer operational or has become defunct. It's an administrative procedure initiated by either the LLP itself (voluntary strike off) or the Registrar of Companies (ROC) suo motu (mandatory strike off) under Rule 37 of the Limited Liability Partnership Rules, 2009.

Unlike a full "winding up" (which is a more complex liquidation process often involving assets and liabilities), a strike-off is ideal for LLPs with:

• No business operations: The LLP has either not commenced business or has ceased all commercial activities for a specified period (typically one year or more).

• No assets and no liabilities: The LLP should not have any outstanding debts, creditors, or assets.

Choosing to strike off your inactive LLP offers several compelling benefits:

1. Avoid Penalties: Continuing to not file annual returns (Form 8 and Form 11) for an inactive LLP can lead to accumulating penalties of ₹100 per day per form, with no maximum limit. A strike-off helps you escape these mounting charges.

2. Cease Compliance Burden: Once struck off, the LLP ceases to exist as a legal entity, freeing its partners from the obligation of annual filings and other statutory compliances.

3. Cost Savings: Avoiding compliance means saving on audit fees, professional fees for filing, and government fees.

4. Peace of Mind: Formal closure provides legal certainty and ensures you're not unknowingly accumulating liabilities or compliance defaults.

5. Simplified Process: Compared to winding up, the strike-off process is generally quicker and less intricate.

An LLP can apply for voluntary strike off if:

1. It has not commenced business operations since its incorporation.

2. It has ceased all commercial operations for a period of at least one year immediately preceding the filing of the application.

3. It has no assets and no liabilities. This is a crucial condition.

The Registrar of Companies (ROC) can also suo motu strike off an LLP if it has reasonable cause to believe that the LLP is not carrying on any business or operation for a period of two years or more, or if it has not filed its annual returns.

For LLPs that meet the eligibility criteria, the voluntary strike-off process generally involves the following key steps:

1. Cessation of Business Operations: Ensure the LLP has completely ceased all commercial activities. The date of cessation should be clearly identified.

2. Settle Liabilities & Close Bank Accounts: All outstanding debts and liabilities (including those to partners, if any) must be cleared. All bank accounts in the LLP's name must be closed, and a bank account closure certificate should be obtained.

3. Obtain Partner Consent: All designated partners must give their unanimous consent for the strike-off.

4. Preparation of Documents:

• Affidavits: Affidavits from all designated partners, stating that the LLP has ceased operations from a specific date (or never commenced business), has no liabilities, and agrees to indemnify any future liabilities.

• Indemnity Bond: An indemnity bond executed by all partners, indemnifying the government against any future claims.

• Statement of Accounts: A statement of accounts disclosing NIL assets and NIL liabilities, certified by a practicing Chartered Accountant, prepared up to a date not earlier than 30 days of the date of filing Form 24.

• Copy of Latest Income Tax Return (if filed): If the LLP has filed any Income Tax Return, a copy of the acknowledgment.

• LLP Agreement & Amendments (if not filed): If the initial LLP Agreement or any amendments were not filed, they must be filed before proceeding with the strike-off.

• Copy of detailed application: A detailed application mentioning full LLP details and reasons for closure.

• Copy of Authority to Make Application: Duly signed by all partners.

5. File Form LLP-24 with MCA: The application for strike-off is filed electronically in Form LLP-24 with the Registrar of Companies (ROC). All the prepared documents are attached to this form.

6. MCA Review and Public Notice: Upon receiving the application, the ROC will review the documents. If satisfied, a public notice will be issued on the MCA website for a period of one month, inviting objections from the public.

7. Final Strike Off: If no objections are received within the stipulated period, the ROC will proceed to strike off the name of the LLP from its register and publish a notice in the Official Gazette. Upon publication of this notice, the LLP stands dissolved.

1. Partner Liability: Even after the LLP is struck off, the liability of every designated partner for any undisclosed liabilities or fraudulent activities continues and can be enforced as if the LLP had not been dissolved.

2. Restoration: An LLP that has been struck off can, under certain circumstances and within a specified timeframe, be restored by filing an appeal with the National Company Law Tribunal (NCLT).

Navigating the nuances of LLP strike-off, ensuring all compliances are met, and preparing the correct documentation can be a complex task. As Practicing Company Secretaries, Pulkit Kinkhabwala & Associates specializes in corporate law and compliance. We can assist you by:

1. Assessing Eligibility: Determining if your LLP is eligible for strike off.

2. Due Diligence: Identifying any outstanding compliances or liabilities.

3. Document Preparation: Drafting all necessary affidavits, indemnity bonds, and other required documents.

4. Filing & Follow-up: Preparing and filing Form LLP-24 and meticulously following up with the MCA until the strike-off is complete.

5. Expert Guidance: Providing clear, concise advice throughout the entire process.

Don't let an inactive LLP become a source of future worry. Reach out to Pulkit Kinkhabwala & Associates today for professional assistance in striking off your LLP efficiently and legally.

In case of query you can contact us on info.pknassociates@gmail.com or +91 9426173791 for guidance.