Procedure for winding up of LLP in India
Listed below is a detailed procedure:
- Adopt a resolution authorising the dissolution of the business with three-quarters of the total number of partners' consent.
- Submit a copy of the Resolution on Form No. 1 to the registrar within thirty days.
- A majority of designated partners must submit a statement of solvency on Form No. 2, supported by an affidavit declaring that the LLP is capable of paying its obligations or will be able to do so within one year of the beginning of winding up. The following must be included in declarations:
- Include a declaration indicating that the LLP was not founded with the goal to deceive any individual or individuals.
- Accompanied by a Form No. 4 Statement of Assets and Liabilities for the period ending on the day the accounts are produced, attested by two authorised partners.
- Accompanied by a valuer-prepared report of asset appraisal.
- Within fifteen days after the passing of the resolution, the declaration must be filed with the registrar on Form No. 3.
- Obtain approval from Creditors (Secured and Unsecured) for liquidation and send them a copy of the preceding statement, the amount owing to each creditor, and an offer of acceptance.
- Creditors are required to offer their approval or opinion within thirty days after receiving the declaration, unless creditors representing two-thirds of the entire value of the declaration concur that:
- In the best interests of Creditors and Partners, the LLP must be dissolved by its Partners.
- If the LLP cannot satisfy its obligations through the sale of its assets during winding up and creditors request that the LLP be dissolved, the LLP will be dissolved by creditors.
- If the LLP is unable to satisfy its obligations through the sale of its assets in winding up and proposes to be wound up by the Tribunal, the LLP will be wound up by the Tribunal and an application for the same must be filed within fourteen days.
- The Declaration must be filed with the registrar on Form No. 5 within 15 days after getting approval from creditors.
- A notice of voluntarily winding up must be published in a newspaper circulating in the district where the LLP's registered/principal office is situated within fourteen days after receiving creditor permission.
Within thirty days of-
- Adoption of a resolution without creditors present.
- Obtaining the approval of creditors
Although partners designate the liquidator, if the consent of two-thirds of creditors is not obtained, creditors may propose another liquidator and determine compensation, and the liquidator nominated by creditors will serve as the liquidator. If creditors do not consent to or pick a different liquidation, however, the liquidator designated by the partners is presumed to be the liquidator. In addition, the Tribunal may appoint the liquidator and determine the remuneration for the liquidator. The tribunal has the authority to dismiss the liquidator given an adequate hearing opportunity.
Following his appointment, the Liquidator must file Form No. 6, disclosing any conflicts of interest or lack of independence to partners or creditors, if appropriate.
The liquidator is responsible for settling the creditors' or partners' list, maintaining accounting books and records, paying debts, and distributing assets to the partners.
- The liquidator should report to the partners or creditors quarterly (on the 31st of March, 30th of June, 30th of September, and 31st of December) on Form No. 8 on the state of the winding up.
- Upon liquidation of the assets and affairs of the LLP, the liquidator should give the partners and creditors with a Form No.9 report documenting the assets and debts that have been disposed of.
- Within thirty days of receiving the liquidator's report, two-thirds of the total number of partners or total value of creditors, whichever is relevant, must approve the dissolution.
- The liquidator must provide the registrar and the court with a final copy of the Form No. 10 accounts and report.
Pre-conditions to be fulfilled for Winding up of LLP
The Limited Liability Partnership needs to meet some conditions for winding up. Consider following points:-
- - The business or commercial operations of the LLP must have halted for at least one year.
- - A statement of account stating zero assets and liabilities as of the day of filing and no earlier than thirty days prior to the date of filing, certified by a Chartered Accountant, must be presented.
- - The LLP may not own any assets or liabilities.
- - The bank account of the LLP must be dormant. If a bank account was created, it must be closed and a bank statement or certificate attesting to its closure must be shown.
Documents required to Close the LLP
In order to dissolve or dissolve the LLP, the following documents must be submitted by the partners:-
- All Partners must consent to the submission of the application for the dissolution of the LLP.
- All authorised partners must submit a statement of fact and an indemnity bond in which they pledge to indemnify the Registrar for any liability that may arise after the name has been removed from the database.
- If the LLP is conducting business and has filed returns, a copy of its most recent income tax return and financial statements.
- A letter indicating that the LLP has no obligation or liability to pay creditors.
- There is no penalty for filing tax returns for the prior fiscal year.
- Copies of the PAN cards of all approved partners.
- Proof of Aadhaar for all partners and specified partners (scanned copy).
- If available, a copy of the LLP agreement or the date of partnership
- The permanent postal address for all chosen partners and affiliates.
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