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Business & Compliance

CHANGES AND CORRECTIONS

Winding Up an LLP


Winding up an LLP:

The Central Government made the LLP (winding up and dissolution) rules 2012 (‘Rules’ for short) in supersession of the Limited Liability Partnership (Winding up and Dissolution) Rules, 2010.  The Rules came into effect from 10.07.2012.

The Rules deal with two types of winding up of Limited Liability Partnership (‘LLP’ for short) namely voluntary winding up and winding up by the Tribunal.   In this article, the procedure on the voluntary winding up of LLP is discussed in detail.

Resolution for voluntary winding up

Rule 5 provides that an LLP may be wind up voluntarily if the LLP passes a resolution to wind up the LLP.  For this purpose the approval of three-fourths of the partners is necessary.  If the LLP has creditors, whether secured or unsecured, in addition to the special resolution by the partners, the consent of the majority of the creditors are to be obtained in a meeting.  A copy of the resolution passed by the LLP is to be filed with the Registrar in Form No. 1

Commencement of winding up

Rule 6 provides that a voluntary winding up shall be deemed to commence on the date of passing of a resolution for voluntary winding up.

Winding up of LLP can be initiated by a Tribunal for the following reasons:

The LLP wants to be wind up.

There are less than two Partners in the LLP for a period of more than 6 months.

The LLP is not in a position to pay its debts.

The LLP has acted against the interests of the sovereignty and integrity of India, the security of State or public order.

The LLP has not filed with the Registrar Statement of Accounts and Solvency or LLP Annual Returns for any five consecutive financial years.

The Tribunal is of the opinion that it is just and equitable that the LLP should be wind up.

Documents required for winding up of an LLP:- (All copies of  documents should be self attested by the customer)

A Board Resolution in favour of winding up

Consent Letter of the Creditors

Report regarding the current valuation of the assets of the LLP, by a recognized Valuer

Statement of Accounts

Statement of Assets, Liabilities, Debts, etc. of the LLP at the time of closure

Affidavits from the Designated Partners

Indemnity Bonds

 Process for Winding up an LLP:

Closure of Bank Account

Prepare a statement of Accounts

Partners meeting and Consent

Drafting of Affidavit & Indemnity Bond

Digital signature of at least one Designated Partner

Application filing for the closure of LLP