Winding up of LLP – Brief

Winding up of a LLP may either be voluntary or by the Tribunal and so wound up LLP shall be dissolved.

A LLP may be wound up by the Tribunal under following cases:

1. By consent of LLP;
2. If for a period of more than six months, the minimum number of partners of LLP has been reduced to two;
3. If unable to re-pay debts;
4. Is acted against the interests of sovereignty and integrity of India;
5. If defaulted in filing with Registrar, the statement of accounts and solvency or annual returns for consecutive five years;
6. By orders of Tribunal

LLP Winding up Procedure (Voluntary Winding Up)

1. A resolution for winding up of LLP must be passed and filed with the Registrar within 30 days of passing of the resolution. 
2. Majority of Partners (not less than two) shall make a declaration-cum-Affidavit to verify that the LLP has no debt or it will pay its debts in full within a period, not exceeding one year from the date of commencement of winding up of LLP.
3. Along with the Affidavit signed by the majority Partners, the following documents must be filed with the Registrar within 15 days of passing of the resolution for winding up of LLP:
   • Statement of assets and liabilities for the period from last accounts closure to date of winding up of LLP attested by at least two Partners
   • Report of valuation of the assets of the LLP prepared by a valuer, if there are any assets in the LLP.

• Winding up approval from Creditors

If a LLP has secured and unsecured creditors, then prior starting up with the aforesaid procedure, a LLP must take from its creditors’, an opinion on winding up within 30 days.

• Appointment of LLP Liquidator

LLP Liquidator must be appointed within 30 days of passing of resolution for voluntary winding up through a resolution. In case there are any creditors, then the appointment of LLP Liquidator shall be valid only if it is approved by two thirds of the creditors in value of the LLP.

The LLP Liquidator would prepare a report (also called Winding Up Report), stating the manner in which the winding up of LLP has been conducted and property of the LLP has been disposed off.

Declaring the LLP as Defunct

In case the LLP wants to close down its business or where it is not carrying on any business operations, it can make an application to the Registrar of Companies for declaring the company as defunct and removing the name of the LLP from its register of LLP’s.

Procedure:

1. An application is required to be made in eForm 24 to the Registrar of Companies for Striking off the name of the LLP under clause (b) of sub rule 1 of Rule 37 of LLP Rules 2008 with the consent of all partners.
2. The Registrar shall publish a notice on its website as to the content of the application for a period of one month for the notice of the general public.
3. Application submitted to be supported by Indemnity Bonds to indemnify any person legally claiming after the LLP to strike off and duly sworn Affidavits declaring all the information provided and statements given to be true, from all partners. 
4. Application filed should also to be supported by No Objection Certificates from concerned Regulatory Authorities with which the LLP is registered.
5. The Registrar, after having sufficient cause to believe that the LLP has any asset or liability, which has been made for the realization of all amount due to the LLP.
6. On the expiry of period of one month, the Registrar may, by an order, strike its name off the register, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the limited liability partnership shall stand dissolved.

Resignation or Removal of a Partner

A Partner in a LLP may cease to be a partner of a LLP in accordance with the LLP agreement between the Partners. If the LLP agreement doesn’t have any restrictions, then a Partner in a LLP can resign from a LLP by providing notice of resignation in writing not less than 30 days to the other Partners in the LLP.

In the following circumstances, a LLP Partner would automatically cease to be a Partner in the LLP:

• On death of the Partner
• On dissolution of the LLP
• If the Partner is declared to be of unsound mind
• If the Partner is adjusted as an insolvent or declared as insolvent.

A Partner in a LLP will be considered to be a Partner unless other Partners have received written notification about the intent of the partner to resign or a notice is given to the Registrar.

To effect a resignation or removal or cessation of Partner from LLP, LLP Form 4 must be filed within 30 days of removal or resignation or cessation of Partner. Form 4 must be signed by a Designated Partner of the LLP and must be filed along with a Certificate from a Chartered Accountant or Company Secretary or Cost Accountant in practice.