LLP strike off
An LLP is a Limited Liability Partnership where each member possesses limited liability. The LLP is an independent legal body where individuals are held only partially personally liable for the partnership’s obligations and liabilities. An LLP strike off is done if the LLP has not conducted any commercial operations for over a year or longer.
According to the terms of the Limited Liability Partnership Act of 2008 and the regulations established under Rule 37(1) of the Limited Liability Partnership Rules of 2009, the Registrar of Companies has the authority to remove the LLP’s status from the registry.
The following article will discuss the step-by-step procedure for LLP strike off. It also describes the requirements, benefits, and techniques for LLP strike off.
Requirements for LLP strike off
The following requirements must be met to strike off LLP:
- LLP has been defunct since its registration period or has been inactive for a minimum of one fiscal year.
- There shouldn’t be any outstanding debts or liabilities for LLP on the date of filing the application form.
- The LLP should cancel all of its current existing accounts and collect the documentation proving account suspension.
- LLP must acquire the member’s permission and approval of any other authority to strike off LLP.
Techniques of LLP Strike Off
LLP strike-off can be done by using the following two techniques:
- Mandatory LLP strike off
- If the LLP has not been performing any commercial operations for a duration of over 2 years or more, the Registrar has decent justification for assuming the case.
- The Registrar must inform the LLP, its director, and its members of his or her desire to have the LLP’s name removed from the register.
- In case of any objection to the LLP strike-off, it must be stated within a month from the time of receiving the notification.
2. Voluntary LLP strike off
- If an LLP is not performing any commercial functions for a duration of over 1 year, then the LLP strike-off can be done by submitting Form 24 to the Registrar.
Documents required for LLP strike off
- Financial statements verified by a Chartered Accountant.
- An affidavit produced jointly or collectively by the specified individuals.
- Permission documents from each of the LLP’s members.
- The DSC token of the authorized member of the Limited Liability Partnership.
- A record of the original limited liability partnership accord and any updates, if one was signed but not registered.
- Account closure details
- A copy of the application that all participants have properly notarized.
Steps for LLP strike off
- Acquire the consent of the members: The LLP shall schedule a meeting for the members and other relevant authorities in order to acquire their consent for the LLP strike-off.
- Filing application form: Following the approval of the members and the concerned authorities, form 24 must be filed along with the necessary documentation with the Registrar of Companies for the LLP strike-off.
- Verification of documents: The Registrar will verify the documents and issue a notification if there are any objections regarding the LLP strike-off.
- Issuing notification for objections: If there are objections to the LLP strike-off, they must be stated within 30 days of receiving the notification.
- Approving the application: In case there are no objections, then after the given duration is over, the Registrar will process the application and approve it.
- Remove LLP from the registry: Once the application is approved, the LLP name will be removed by ROC, and the LLP will be declared dissolved under the registry.
Benefits of terminating an LLP
- Minimizes Fines & Obligations- If an inactive or non-operational LLP doesn’t follow the law, in that case, its officials could be subject to harsh fees, fines, and consequences, such as being prohibited from founding a new LLP in particular circumstances. Therefore, LLP strike-off is advisable for dormant or not functioning Limited Liability Partnership firms in order to minimize possible penalties or obligations.
- Reduces Compliance Costs- An LLP strike-off would mean that the LLP no longer exists. Hence, the owners or members are released from compliance obligations and potential consequences of non-compliance.
- Fast Closure Procedure- LLPs that are dormant or non-operational could be dissolved quickly in 3 to 16 days instead of longer and much more laborious processes using traditional techniques.
Conclusion
The above article describes the techniques that can be used for LLP strike off. In India, the two ways for LLP strike-off are mandatory LLP strike-off and voluntary LLP strike-off.
For a voluntary LLP strike-off, the approval of all the members and directors is necessary. However, for mandatory LLP strike-off, the Registrar of Companies will inform the LLP of its justification for the LLP strike-off.
For an LLP strike-off in India, you could speak with Odint Consultancy. Our team of professionals will assist you with the procedure.
FAQ’s
If an LLP has not conducted any commercial operation for a period of more than a year or longer, then the LLP, such as a defunct LLP, may apply for the removal of its name under the ROC.
- Minimizes Fines & Obligations
- Reduces Compliance Costs
- Fast Closure Procedure
- Mandatory LLP strike-off
- Voluntary LLP strike-off
- Acquire the consent of the members
- Filing application form
- Verification of documents
- Issuing notification for objections
- Approving the application
- LLP strike off from the registry
