Winding Up – LLP

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Winding Up – LLP

₹12,126.00 – ₹19,753.00

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Filing for Winding up of LLP for which compliance is upto date.

About this item

  • Winding up Accounts Finalisation
  • Statement of Accounts Preparation
  • 1 Year Income Tax Filing
  • Winding Up Document Drafting,
  • Form Preparation & Filing
  • Managing Winding Up Process.

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Description

Winding up of an LLP

The LLPs are newly formed business entities that were introduced through the LLP Act,2018 in India. The Limited Liabilities enjoy the audit exemption if the annual turnover of the LLP is less than Rs40 lakh or the capital contribution is less than Rs.25 lakhs.

The Limited Liability partnership is a basic partnership in which all the partners share limited liabilities as the LLP is set up under certain legal terms and documentation. There is a specific process as to how an individual can register his or her LLP. As there are advantages of registering as an LLP in India, there are also some disadvantages. Many of them are also unsure about the process of Winding up an LLP. Here, we are going to take a look at how to wind up an LLP in India.

Section 63,64 and 65 of the LLP Act,2008 regulates the process of winding up of the LLP. The Limited Liability Partnership winding up can be initiated voluntarily or by a tribunal. Let us take a look at both in detail.

Types of Company windup

What are the different ways in which an individual can windup a Company?

A company can be wound up in two different ways-

  • Voluntary winding up of a Company
  • Compulsory winding up of a company

 

1. Voluntary Winding up of a Company

The Winding up of a Company can be done voluntarily by the members of the Company, if :

  • The company passes a special resolution for winding up the Company.
  • The Company in general meeting passes a resolution which requires a company to wind up voluntarily as a result of the expiry of the period of its duration, any as per the Articles of Association or on the occurrence of any event in respect of which the articles of association provide that the company should be dissolved.

Procedure for Voluntary winding up of a Company

  • Convene a board meeting with the Directors in which a resolution should be passed with a declaration by the directors that they have made an enquiry in the affairs of the Company and the company no debts or the Company will pay from the precedes of the assets sold in the voluntary wind up of the company.
  • Notices should be issued in writing to call for the general meeting of the Company proposing the resolutions, with a suitable explanatory statement.
  • Pass the ordinary resolution for winding up of the Company in the generally meeting by ordinary majority or special resolution by 3/4 majority. The Winding up of the Company shall commence from the date of passing the resolution.
  • A meeting of the creditors should be conducted on the same day or the next day of passing the resolution regarding winding up. If the 2/3rd value of the creditors are of the opinion that it is in interest of all parties to windup the Company, the the Company can wound up voluntarily.
  • Within 10 days of passing the resolution for company winding up , a notice for appointment of liquidator must be filed with the registrar.
  • Within 30 days of the general meeting for the winding up the certified copies of the ordinary or special resolution passed in the general meeting for the winding up of the Company.
  • The affairs of the company need to be wind up and prepare the liquidators account of the Winding up account and to get it audited.
  • Call for the final General meeting of the Company.
  • A special resolution should be passed for the disposal of the books and the papers of the company when the affairs of the company are completely wound up and it is about to be dissolved.
  • Within two weeks of the general meeting of the Company, file a copy of the accounts and file and the application to the tribunal for passing an order for the dissolution of the company.
  • The tribunal shall pass an order dissolving the company within 60 days of receiving the application.
  • The company liquidator is required to file a copy of the order with the registrar.
  • The registrar will then on receiving the copy of the order passed by the Tribunal then publish a notice in the official gazette that the Company is dissolved.

Winding up of an LLP by the tribunal

The Winding-up of the LLP is initiated by a tribunal for the following reasons:

  • The LLP wants to wind up.
  • There are less than two partners in the LLP for more than 6 months
  • The LLP is not in a position to pay debts
  • The LLP has acted against the interest of the sovereignty and the integrity of India, the specified security of the state or public order.
  • The LLP has not filed with the statement of accounts and solvency or the LLP annual returns for any five consecutive financial years with the Registrar.
  • The Tribunal thinks that is just and equitable that the LLP should windup.

Voluntary winding-up of an LLP

The LLP winding-up process can be easily initiated with the approval of 3/4th of the partners. To begin with the liquidation process for the LLP the designated partners need to make a declaration that the LLP does not have any debt or that the LLP will pay the debts totally within not more than 1 year from the process of winding up of an LLP.

Also, the LLP partners need to declare that the LLP is not winding up because of any frauds. This statement of the declaration must be prepared along with the statement of the assets and the liabilities until the most recent practicable date right before making the declaration for winding up of the LLPs.

Also, a valuation of the assets that are relevant to the LLP should be prepared and submitted, in case of any assets. Voluntary winding up the LLP will be effective from the start date of passing the resolution for the reason of voluntary winding up of the LLP.

Procedure to Windup LLP

How-to Wind-up LLP?

To initiate the process of winding up of an LLP a resolution for winding up the LLP should be passed and filed with the registrar within 30 days of passing the resolution for the same. The date of passing the resolution of the winding up of the LLP the voluntary winding up shall be deemed to commence.

After the resolution for winding up of the LLP is filed with the registrar, the majority of Partners shall make a declaration that is verified by an affidavit to the effect that the LLP has no debts or that it will be in the position to pay the full debts within a period as mentioned in the declaration (This period should not exceed one year from the date of the commencement of winding up of the LLP).

Along with the affidavit that is signed by the majority of the Partners the following documents should be filed with the registrar within 15 days of passing the resolution for winding up an LLP:

  • The statement of the assets and liabilities for the period from the last two accounts closure to date of winding up of LLP attested by at least two partners
  • Report of the valuation of the assets of the LLP prepared by the valuer if there are any.

Winding up with the Creditors

The majority of the partners are needed to announce Form 2 stating that they have no sum unpaid or that they will clear the debts within a specified period but not exceedingly more than a year from the date of passing the resolution for the sake of winding up.

Publication of the resolution

Now after passing the resolution of winding up and receiving the consent from the creditors for winding up within 14 days, the LLP is required to publish an advertisement regarding the resolution of the winding up in a newspaper that is circulated in the territory where the registered office is located or where the office of the LLP is registered.

Appointment of the LLP Liquidator

After the approval from a majority of the partners is obtained through the resolution, a voluntary liquidator as the LLP liquidator is appointed with fixed remuneration. The liquidator will be appointed only after the approval of 2/3rd of the creditors in the value of the LLP.

The creditors also have a choice to nominate an LLP liquidator and in case of the instantaneous appointment by the creditors and the partners, the LLP liquidator that is appointed by the creditors will come to existence. If the liquidator is acting then the tribunal will be appointing an LLP liquidator.

Filing of winding up by a Liquidator

After the affairs of the LLP are fully wound up, the LLP liquidator will need to prepare a report that states how the winding-up of the LLP has been conducted and the property of the LLP has been disposed of.

In case two-thirds of the number of the Partners and creditors in value are satisfied with the report of winding up that is prepared by the LLP liquidator, then a resolution for winding up the accounts and the explanation for the dissolution must be passed by the partners.

The LLP liquidator is then required to send this LLP winding up report along with the resolution to the Registrar and file an application with the tribunal.

Dissolution

A report will be made by the LLP liquidator as soon as the affairs of the LLP are wound up. Discharging the liabilities of the LLPS mean that the liabilities have been discharged, the assets have been liquidated, a report will be made by the LLP liquidator in Form 9. This form states how the company has been wound up and also includes the final accounts closing with the detailed explanation and the property which has been disposed of. Once this approval of the partners, the creditors are sought for dissolution.

In the end, it can be concluded by saying that closing an LLP is rather a two-way process where one wants to wind up the LLP and decides to do it as well as other circumstances make one do it.

Striking off

The Limited Liability Partnership Rules, 2009 was recently amended by introducing the Limited Liability Partnership Rules,2017 with effect from 20th May 2017. Under this amendment form, LLP 24 has been introduced by the MCA and now it is possible to windup the LLP easily by just making an application to the Registrar for striking off the name of the LLP.

Before the introduction of this Limited Liability Partnership Rules,2017 the procedure for winding up an LLP used to be very long and cumbersome. But, the introduction of LLP form 24 under the new amendment has made the whole process very easy and simple.

What happens after the winding-up on an LLP?

Once the process of Winding up begins a company is not allowed to pursue its business except in case if the LLP has to complete the liquidation and the distribution of the assets. By the end of the process, the company will be dissolved and the LLP will effectively cease to exist.

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