Strike Off of LLP

By introducing the Limited Liability Partnership (Amendment) Rules, 2017 with effect from 20th May 2017, The Ministry of Corporate Affairs has recently amended Limited Liability Partnership Rules, 2009. With this amendment, LLP Form 24 has been introduced by the MCA and it is now possible to easily close an LLP by making an application to the Registrar for striking off the name of LLP.

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Strike Off of LLP– An Overview

Entrepreneurs frequently establish Limited Liability Partnerships (LLPs) but often struggle to sustain them. The penalty for LLPs that fail to file any statutory returns amounts to Rs.100 per day, with no upper limit. Therefore, it is generally advisable to dissolve or close inactive LLPs to eliminate the obligation of submitting LLP Form 11, LLP Form 8, and the Income Tax Return for the LLP each financial year, thereby ensuring compliance and avoiding penalties.

Mandatory Striking of the LLP

In the event of mandatory striking off, the Registrar of Companies (ROC) will issue a notice to the Limited Liability Partnership (LLP) indicating the intention to remove the LLP’s name from the register. The notice will request the LLP to submit their representations within one month from the date of the notice, provided that the LLP has not engaged in any business activities for the preceding two years. It is crucial to emphasize that the ROC must have reasonable grounds to believe that the LLP is inactive if Forms 8 and 11 have not been submitted for the prior two years.

Voluntary Striking off the LLP

In the case of a voluntary striking off of a Limited Liability Partnership (LLP), the LLP is required to submit an application in e-Form 24 to the Registrar, provided that all partners of the LLP consent to the removal of its name from the register.

Next, we will examine the key aspects following the interpretation of the pertinent rule regarding the striking off of the LLP.

1. In instances where the Limited Liability Partnership is governed by a specific statute, the request for the removal of its name must be accompanied by the endorsement of the regulatory authority established under that statute.
2. The details of the notice issued by the Registrar of Companies (ROC) and the application submitted by the LLP will be made available on the Ministry of Corporate Affairs’ website for public access for a duration of one month.
3. As previously mentioned, in the event of a mandatory strike-off, the Registrar is required to issue a notice to the LLP, providing a reasonable opportunity for the LLP to present its case as to why it should not be dissolved. This correspondence must occur within one month; otherwise, the Registrar will remove the LLP’s name from the register and publish a notice in the Official Gazette.
4. The liability of each designated partner of the dissolved LLP will persist and can be enforced as if the LLP had not undergone dissolution.

Additionally, it is crucial to recognize that the following documents must accompany e-Form 24:

– An affidavit signed by the designated partners, following the format specified in sub-clause (b) of clause (II) of sub-rule (1A) of rule 37;
– A copy of the authority to submit the application, duly signed by all partners;
– A copy of the acknowledgment of the most recent Income Tax Return, if filed;
– The consent of all partners;
– Financial statements indicating nil assets and nil liabilities, certified by a practicing Chartered Accountant, prepared no earlier than thirty days prior to the filing date; and
– An application outlining the reasons for the strike-off and the current status of the Company.

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Voluntary Striking off the LLP

Next, we will examine the key aspects following the interpretation of the pertinent rule regarding the striking off of the LLP.

1. In instances where the Limited Liability Partnership is governed by a specific statute, the request for the removal of its name must be accompanied by the endorsement of the regulatory authority established under that statute.
2. The details of the notice issued by the Registrar of Companies (ROC) and the application submitted by the LLP will be made available on the Ministry of Corporate Affairs’ website for public access for a duration of one month.
3. As previously mentioned, in the event of a mandatory strike-off, the Registrar is required to issue a notice to the LLP, providing a reasonable opportunity for the LLP to present its case as to why it should not be dissolved. This correspondence must occur within one month; otherwise, the Registrar will remove the LLP’s name from the register and publish a notice in the Official Gazette.
4. The liability of each designated partner of the dissolved LLP will persist and can be enforced as if the LLP had not undergone dissolution.

Additionally, it is crucial to recognize that the following documents must accompany e-Form 24:

– An affidavit signed by the designated partners, following the format specified in sub-clause (b) of clause (II) of sub-rule (1A) of rule 37;
– A copy of the authority to submit the application, duly signed by all partners;
– A copy of the acknowledgment of the most recent Income Tax Return, if filed;
– The consent of all partners;
– Financial statements indicating nil assets and nil liabilities, certified by a practicing Chartered Accountant, prepared no earlier than thirty days prior to the filing date; and
– An application outlining the reasons for the strike-off and the current status of the Company.

Legalixo Support in transitioning a Strike Off of LLP

Purchase a Plan for Expert Assistance
Add Queries Regarding the conversion
Provide Documents to Legalixo Expert
Complete all other required Actions
Get your work done!

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