Every entrepreneur wants its business to flourish more & generate profits, but there are multiple scenarios wherein an entrepreneur has to take the decision of closing down his business. In legal terms, we call it as winding up. It is the last stage of a company in which its presence for past several years is dissolved and all its assets are used to pay off the creditors, shareholders and other liabilities.
Importance of winding up of an LLP
- Avoid compliance
- Avoid any penalties or fines
- Low cost as compared to maintaining compliance for a dormant LLP
If your LLP is not operating properly or faces continuous business losses, it is advisable to close such LLP and look for some alternate business solutions to come up with. An LLP needs to be closed or windup when there are no activities since incorporation or the Partners of LLP are not willing to continue operations. An LLP normally can be shut down per below circumstances.
A) Conditions for winding up of an LLP
Conditions for winding up of an LLP
As per Limited Liability Partnership (Amendment) Rules, 2017, the procedure for winding up of an LLP can be initiated either
By the tribunal (Compulsory winding up) or,
An LLP can be wound up by a Tribunal for any of the following reasons:
LLP has less than two Partners for a period of more than 6 months
The LLP has acted against the integrity and sovereignty of the country, the security of State or public order
The LLP doesn’t have revenue to pay its debts and loans
The LLP has not filed its returns or submitted financial statements to ROC for five consecutive years
If the tribunal has decided (by means of any findings) that it is only right to wind-up the operations of the LLP
If the LLP or its members have been involved in any fraudulent transactions, been getting financial gain or profits through illegal transactions
If an LLP falls under any of the above cases, a tribunal is formed and a resolution is taken to wind-up the operations of LLP under study. Such tribunal decisions are considered as final.
B) Conditions for winding up of an LLP
The decision of voluntary winding up of an LLP entirely depends on the shareholder’s decision. Before winding up an LLP, the partners must:
Get an approval of 3/4th of the partners.
Declare that the LLP is not being wound up to defraud any person or person
A declaration that the LLP has no debt or that it will be capable to pay the debts in full within a period of not more than 1 year from the start of winding up
The declaration for winding up of the LLP must be prepared along with a statement of assets and liabilities.
Procedure to wind up an LLP
Shareholder’s meeting & consent
Drafting of Affidavit & Indemnity Bond
Board resolution creation
Closure of bank account
Statement of account preparation
Application filing for the closure of LLP
Three Easy Steps to wind up an LLP
Three Easy Steps to wind up an LLP
Connect to Corpseed
Provide necessary documents required for winding up of LLP.
Our company compliances expert will help your LLP to wind up as per ROC rules and regulations.
Decisions a Tribunal may Take
Dismiss your petition for winding up the LLP.
Final decision on whether to wind up the LLP or not.
Any other decision required as per law.
Pass a resolution in the board meeting.
There should be no business activity from the day when above resolution is passed
Declaration by partners stating there is no debt pending on LLP and the required forms are filed.
Corpseed Procedure for winding up an LLP
Corpseed Procedure for winding up an LLP
Step 1: - Corpseed received your request for winding up of LLP
Step 2: - We will assign a dedicated resource who is professionally skilled in regulations required to wind up an LLP. You can get in touch with the assigned resource at any point of time for consultation and assistance regarding winding up of your LLP.
Step 3: - Our experts will draft the affidavit and board resolution for winding your LLP and ask for your approval.
Step 4: - Our expert will file your latest financial statement, with MCA.
Step5: - Our resource will assist you till the Tribunal passed an order for dissolution.
Step 6: - Above 5 steps completes your request of winding up your LLP.
How to get Wind UP Limited Liability Partnership ?
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