LLP Closure

The simplest way to close a Limited Liability Partnership (LLP) with no assets and liabilities is to strike off its name from the register. This process requires the designated partners to settle the accounts of the LLP by selling any assets and paying off any liabilities, if any. Once this is done and there are no objections from the general public, the Registrar will close the LLP. It’s important to note that strike off is not the legal end of the LLP, and designated partners are required to file an Indemnity for security against future liabilities when applying for strike off. In case any future liabilities or obligations arise, designated partners will be personally liable, unlike in winding up. Therefore, it’s advisable to settle all liabilities and disputes before proceeding with strike off to protect oneself from future liabilities.

The legal provisions for closure of an LLP or strike off are governed by Rule 37 of the Limited Liability Rules, 2009. According to this rule, an LLP can apply for strike off if it has been defunct, i.e., not carrying on any business or operations, for at least one year, with the consent of all partners. The Limited Liability Partnership (Amendment) Rules, 2017 added additional requirements for strike off, including filing overdue returns, submitting a statement of account with nil assets and liabilities certified by a Chartered Accountant, and providing an affidavit signed by the designated partners stating that the LLP has not commenced business, has no liabilities, has not opened any bank account or has closed any bank accounts, and has not filed any income-tax returns if applicable. A copy of the acknowledgement of the latest income-tax return and the initial LLP agreement, if any, should also be enclosed. These requirements ensure that the LLP has no outstanding obligations and protects the designated partners from future liabilities even after strike off.