Closing a Limited Liability Partnership (LLP): What You Need to Know
Learn how to close a dormant or inactive LLP in India, including eligibility conditions, reasons, required documents, and step-by-step procedures under the LLP Act, 2008.
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Overview of Closing an LLP
If an LLP has been inactive for over a year or never commenced operations post‑registration, it can apply for closure with the Registrar of LLPs to have its name removed from the official register. Maintaining a dormant LLP entails ongoing compliance costs; closing it avoids penalties for non‑compliance and unnecessary administrative burden.
Conditions for Closing an LLP
● The LLP has not commenced business since incorporation or has been inactive for at least one financial year. ● There are no outstanding assets or liabilities in the LLP’s name at the time of application. ● The LLP’s bank account (if any) has been closed. ● All partners, creditors, and relevant authorities have given consent for closure. Meeting these conditions is necessary to proceed with the strike‑off process under MCA guidelines.
Advantages of Closing an LLP
• Simplified Compliance: No need for ongoing regulatory filings or maintenance. • No Future Penalties: Ensures the LLP is not liable for future fines or non‑compliance charges. • Better Resource Allocation: Frees up time, effort, and capital for more productive ventures.
1. Documents Required to Close an LLP
✅ Registered Office Proof
• Proof of the registered LLP address
• NOC from landlord (if rented), along with rent agreement or utility bill
✅ Statement of Accounts
• CA‑certified statement of accounts showing nil assets and liabilities (not older than 30 days)
✅ Income Tax Return
• Acknowledgement of the latest ITR, if filed
✅ LLP Agreement
• Copy of the original LLP agreement and any amendments, if applicable
✅ Affidavit by Designated Partners
• Notarized affidavit declaring:
– The LLP has not commenced business or has ceased operations
– The LLP has no liabilities and agrees to indemnify future claims
– The LLP’s bank account (if any) has been closed (supported by bank closure certificate)
– No ITR filed if no business activity occurred
✅ NOC from Creditors and Partners
• NOC from secured creditors (if any) and from all partners
✅ Detailed Application
• Formal application stating LLP details and reasons for closure
✅ Authority Letter
• Authorization letter authorizing a partner to file the closure application (signed by all partners)
✅ Indemnity Bond
• Indemnity Bond signed by designated partners, taking responsibility for any future claims
Method 1: Striking Off the LLP as Defunct
1. Eligibility: LLP stopped operations for one year or more.
2. File e‑Form 24 under Rule 37(1)(b) of the LLP Rules, 2008 to apply for strike‑off.
3. Registrar may issue a notice and allow one month for response; if no response, name is struck off.
4. Application or notice is published on the MCA website for public awareness for at least one month.
Method 2: Winding Up of LLP
Under Sections 63‑65 of the LLP Act, 2008:
● Voluntary Winding Up: Partners mutually agree to wind up, settle liabilities, and distribute remaining assets.
● Compulsory Winding Up: NCLT may order closure if:
– Number of partners falls below two for over six months
– Inability to pay debts
– Non‑filing of financial statements for five consecutive years
– Activities against national interest or other reasons deemed fit by the Tribunal
Step‑by‑Step Process to Close an LLP
1. Conduct a Meeting of Partners: Pass a resolution authorizing closure and appoint a Designated Partner to file with ROC.
2. Settle All Liabilities: Clear all debts and liabilities before proceeding.
3. File e‑Form 24 with ROC: Designated Partner submits e‑Form 24 with attachments:
• Board resolution for closure
• Consent from all partners and creditors (if any)
• Bank account closure statement
• Statement of assets & liabilities certified by a CA
• Indemnity bond and affidavit by partners
• Latest ITR acknowledgment
• Authorization letter for application submission
• Reasons for closure and business inactivity proof
• PAN and Aadhaar of partners, and PAN of LLP
4. ROC Review: ROC verifies documents; may issue notice if discrepancies arise.
5. Certificate of Closure: Upon approval, ROC issues a Certificate of Closure.
6. Surrender PAN and TAN: Surrender the LLP’s PAN and TAN to the Income Tax Department.
Listicles
Top Reasons for Closing an LLP
- LLP formed for a specific objective that has been fulfilled
- Insolvency and inability to meet financial obligations
- LLP inactive or non‑operational for at least one year
- Closure mandated by a legal or court order
- Partners mutually decide to discontinue operations
- Death of one or more partners leading to dissolution
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