Close the LLP

Close the LLP: complete guide

Introduction

Not every business plan works out, and not every business is meant to last forever. Partners may decide to stop a venture that is not profitable, an LLP formed for a single project may have finished its work, the partners may have moved on to other businesses, or an LLP may have been incorporated but never started operations. In all these cases, simply stopping business is not enough. A limited liability partnership remains a registered entity under the Limited Liability Partnership Act, 2008 until its name is formally removed from the register. Until then, it must keep filing its annual returns and statements, and its designated partners remain responsible for compliance.

An LLP that is inactive but not closed continues to build up obligations. Annual filings of the statement of account and solvency in Form 8 and the annual return in Form 11 remain due every year, and late filing attracts additional fees that grow with each day of delay. Income tax returns must still be filed. The designated partners can face penalties, and their DINs can be affected by continued defaults. Closing the LLP properly ends these obligations and protects the partners from future liability for filings they no longer need to make.

There are two main ways to close an LLP. The first, and the most commonly used for small and inactive LLPs, is an application to the Registrar to strike off the LLP's name under Section 75 of the Act read with Rule 37 of the LLP Rules, 2009, filed in Form 24. This route is available where the LLP has not carried on business for at least a year, or has never started business, and has no liabilities. The second is voluntary liquidation under the Insolvency and Bankruptcy Code, 2016, which is used where the LLP has assets to distribute or liabilities to settle, and involves the appointment of an insolvency professional as liquidator. A third route, winding up by the tribunal, applies in specific situations set out in the LLP Act.

Our team assesses which route fits your LLP, helps you clear pending filings, prepares the statement of accounts, affidavits and indemnity, files the closure application, and follows it through until the LLP's name is struck off. This page explains who needs this service, the legal requirements, the step-by-step process, documents, timelines, our fee and what happens after closure.

Who Needs It

You may need to close your LLP if:

• The LLP was incorporated but never started business. Many LLPs are formed for a plan that does not go ahead.
• The LLP has stopped business for a year or more, and the partners have no plan to restart.
• The project for which the LLP was formed is complete, and there is no further work.
• Partners have decided to move to a different structure, such as a private limited company, and the old LLP is no longer needed after the business has been transferred.
• The partners have separated, and none of them wants to continue the LLP.
• The LLP is building up late fees for missed annual filings and the partners want to end the ongoing cost and risk.
• A partner is moving abroad or retiring, and the remaining partners do not want to continue.
• The LLP has assets or liabilities to wind up, and the partners want a formal liquidation process to settle them before closure.

Key Benefits

• End of annual compliance. Once the LLP is struck off or dissolved, Form 8, Form 11 and other annual filings are no longer required.
• Protection for designated partners. Closing an inactive LLP properly avoids continued defaults that can lead to penalties for designated partners.
• No more late fees. Additional fees for late filings stop building up once the LLP is closed.
• Clean public record. The LLP's status on the MCA records changes to struck off or dissolved, which shows that the partners closed it in an orderly way.
• Freedom to start afresh. Partners can focus on new ventures without the administrative burden of an inactive entity.
• Proper settlement of affairs. Where liquidation is used, assets are realised and liabilities settled in an organised way, and the partners receive any surplus.

Strike-off versus voluntary liquidation. Strike-off through Form 24 is a simpler and shorter route, suitable for LLPs that have no assets, no liabilities and no ongoing business. Voluntary liquidation under the Insolvency and Bankruptcy Code is more formal: the partners make a declaration of solvency, a liquidator is appointed, creditors are notified, assets are sold and liabilities paid, and the tribunal finally passes an order dissolving the LLP. Liquidation takes longer and involves more cost, but it is the right route when the LLP owns property, has money to distribute, or has creditors to pay. We explain both routes and recommend the one suited to your LLP's position.

Why a struck-off LLP is not a free pass. The Act provides that the liability of designated partners and partners for acts done before strike-off continues, and that a struck-off LLP can be restored on application in certain circumstances. This means closure should be done honestly and with complete disclosures, so that the partners are not exposed to claims later.

Eligibility and Legal Requirements

For strike-off through Form 24, the main requirements under Section 75 of the LLP Act and Rule 37 of the LLP Rules, 2009 are:

• No business for at least one year, or never started business. The LLP must not have carried on any business or operation for at least one year, or must not have commenced business since incorporation.
• No liabilities. The LLP must have no outstanding liabilities, or all liabilities must have been settled before the application.
• Pending filings cleared. The LLP must file its overdue statements of account and solvency and annual returns up to the end of the financial year in which it stopped carrying on business, before or along with the application, as required under the current rules.
• Bank account closed. The LLP's bank accounts should be closed, and proof of closure obtained.
• Statement of accounts. A statement of accounts showing nil assets and nil liabilities, made up to a date not earlier than 30 days before the application, certified by a chartered accountant, must be attached.
• Consent of partners. The application must be approved by all partners.
• Affidavit and indemnity. Designated partners must give an affidavit confirming that the LLP has ceased business and has no liabilities, and an indemnity bond.
• Tax clearance. Pending income tax, GST and other registrations should be closed or cancelled, and any tax dues paid.
• Public notice. After the application, the Registrar publishes a notice and allows a period for objections before striking off the name.

For voluntary liquidation under the Insolvency and Bankruptcy Code, 2016 and the related regulations:

• No default in debts. A majority of the designated partners must make a declaration that the LLP has no debt, or will be able to pay its debts in full from the proceeds of assets sold in liquidation, and that the LLP is not being liquidated to defraud any person.
• Partners' resolution. The partners must pass a resolution to wind up the LLP voluntarily and appoint an insolvency professional as liquidator.
• Approval of creditors. Where the LLP has creditors, approval of creditors representing the required majority in value is needed.
• Liquidation process. The liquidator realises assets, pays creditors, distributes the surplus and applies to the tribunal for an order of dissolution.

Government fees are payable at actual. Closure procedures and forms are updated from time to time, and we check the current requirements at the time of filing.

Step-by-Step Guide

The steps below describe the strike-off route through Form 24, which is used by most inactive LLPs. Where voluntary liquidation is more suitable, we explain that process separately.

1. Initial consultation. We discuss when the LLP stopped business, whether it ever started, what assets and liabilities it has, and what filings are pending.
2. Compliance review. We check the LLP's filing history on the MCA portal, identify overdue Form 8 and Form 11 filings, and review income tax and GST status.
3. Clearing pending filings. We prepare and file the overdue annual statements and returns that must be on record before the closure application, as required by the rules.
4. Settling liabilities and closing registrations. We guide you on settling any outstanding dues, cancelling the GST registration with the final return, and closing other registrations.
5. Closing the bank account. You close the LLP's bank accounts and obtain a closure certificate or final bank statement.
6. Statement of accounts. We arrange for a chartered accountant to certify a statement of accounts showing nil assets and liabilities, made up to a date within 30 days of filing.
7. Partners' consent and affidavits. We draft the partners' resolution or consent approving closure, the affidavit and the indemnity bond for the designated partners, which are signed and notarised.
8. Filing Form 24. We prepare and file Form 24 on the MCA portal with all attachments, signed digitally by a designated partner and certified by a practising professional.
9. Public notice and objections. The application is examined, and a public notice of the proposed strike-off is published, inviting objections within the period allowed. We respond to any queries raised during this stage.
10. Strike-off and handover. Once the period for objections ends and the application is approved, the LLP's name is struck off the register and a notice of dissolution is published. We share the final status and guide you on keeping records.

Documents Checklist

From the LLP:

• Certificate of incorporation and LLP agreement, with any supplementary agreements
• PAN of the LLP
• Details of all partners and designated partners, with DINs
• Digital Signature Certificate of a designated partner
• Filed Form 8 and Form 11 for past years, or the information needed to file pending ones
• Income tax returns filed by the LLP
• GST registration certificate and cancellation order, if applicable

Closure documents:

• Bank account closure certificate or final bank statement showing nil balance
• Statement of accounts showing nil assets and nil liabilities, certified by a chartered accountant
• Consent or resolution of all partners approving the closure
• Affidavit signed by the designated partners, duly notarised
• Indemnity bond signed by the designated partners, duly notarised
• Statement confirming that no proceedings are pending against the LLP, or details of any that are

For voluntary liquidation, additionally:

• Declaration of solvency by the designated partners
• Audited financial statements and a valuation report of assets, as required
• Consent of the insolvency professional to act as liquidator

How Long It Takes

The time to close an LLP depends on the route and on the LLP's filing history:

• Compliance review and clearing pending filings: one to three weeks, depending on how many years of filings are overdue and how quickly the information is available.
• Bank account closure and tax registrations: depends on the bank and on GST cancellation timelines.
• Preparation of closure documents and filing Form 24: usually five to seven working days once the bank account is closed.
• Processing, public notice and strike-off: typically three to six months from filing, as the application is examined, a notice is published, and a period is allowed for objections.

Voluntary liquidation usually takes considerably longer, often a year or more, because it involves realising assets, settling claims and obtaining an order of the tribunal.

Pricing

Our professional fee for Close the LLP is ₹ 9,999.

This covers:

• Consultation and assessment of the closure route
• Review of the LLP's filing status
• Drafting of the partners' consent, affidavit and indemnity bond
• Coordination of the certified statement of accounts
• Preparation and filing of Form 24
• Handling of queries and resubmission requests on the closure application
• Tracking the application until the LLP is struck off

Government fees, notary charges and stamp duty are payable at actual. Filing of overdue Form 8 and Form 11 returns, overdue income tax returns, GST cancellation and final returns, and voluntary liquidation under the Insolvency and Bankruptcy Code are quoted separately where they apply.

Common Mistakes to Avoid

• Just stopping business. An LLP that stops business without applying for closure keeps its filing obligations and builds up late fees.
• Ignoring pending annual filings. The closure application can be rejected if overdue statements and returns that are required under the rules are not filed.
• Not closing the bank account. An open bank account suggests the LLP is still active and can hold up closure.
• Applying while liabilities remain. Strike-off is only for LLPs without liabilities. If there are creditors, they must be paid or the voluntary liquidation route used.
• Leaving GST active. A GST registration that is not cancelled continues to need returns, and late fees apply.
• Incorrect statement of accounts. The statement must be made up to a recent date and must show the true position. A false statement can expose the partners to liability.
• Transferring assets without records. If the LLP's assets are transferred to partners or another entity before closure, this must be properly documented and accounted for.
• Disposing of records too early. Partners should keep the LLP's books and records for the period required by law, as they may be needed for tax or other proceedings.

What Happens After

Once the LLP's name is struck off, it ceases to exist as a registered entity, and its annual filing obligations end. After closure:

• Keep records safe. Preserve the books of account, filings and closure documents for the period required under law, as tax or other authorities may still raise queries for earlier years.
• Surrender or cancel remaining registrations. Ensure that registrations such as professional tax, shops and establishments, import-export code and others are closed if they have not already been.
• Close the PAN where required. Follow the process for intimating the closure to the tax department, as advised at the time.
• Remember continuing liability. The liability of partners for acts done before closure continues, and the LLP can be restored on application in certain cases.
• Inform stakeholders. Inform clients, suppliers and any landlord that the LLP has closed.

Our team can help with tax and record-keeping matters after closure, and with setting up a new entity if you plan to continue business in another form.

FAQs

Can an LLP be closed if it never started business?

Yes. An LLP that has not commenced business since incorporation can apply for strike-off through Form 24, provided it has no liabilities and meets the other conditions.

How long must an LLP be inactive before applying for strike-off?

The LLP must not have carried on any business for at least one year before applying, unless it never started business at all.

Do pending annual filings need to be filed before closure?

Yes. Under the current rules, the LLP must file overdue statements of account and solvency and annual returns up to the end of the financial year in which it stopped carrying on business, before or with the closure application.

What is the difference between strike-off and liquidation?

Strike-off is a simpler process for LLPs with no assets, no liabilities and no business. Voluntary liquidation is a formal process for LLPs that have assets to realise or creditors to pay, handled by a liquidator and ending with a tribunal order.

Do we need to close the bank account before applying?

Yes. The bank account should be closed and proof of closure attached, since the statement of accounts must show nil assets.

Can the LLP be closed if it has a pending tax demand?

An LLP with outstanding liabilities, including tax dues, should settle them before applying for strike-off. If they cannot be settled, closure through strike-off may not be suitable.

What happens to the GST registration?

The GST registration must be cancelled separately through the GST portal, and a final return filed. Closure of the LLP with the Registrar does not automatically cancel GST.

Can a struck-off LLP be restored?

Yes. In certain situations, the Act allows a struck-off LLP to be restored on application by the LLP, a partner, a creditor or an authority, if the strike-off is found to be unjustified.

Are partners still liable after the LLP is closed?

Partners and designated partners remain liable for acts done before the strike-off. This is why the closure should be done with accurate disclosures.

Who certifies the statement of accounts?

The statement of accounts showing nil assets and liabilities must be certified by a chartered accountant in practice.

Can a partner close the LLP alone?

No. The application requires the consent of all partners, and is signed by a designated partner.

Do partners need to visit any government office?

No. The process is online. Partners need to sign the affidavit and indemnity bond before a notary, and the designated partner signs the form digitally.

What if objections are raised to the strike-off?

If a creditor or authority objects, the Registrar considers the objection. The LLP may need to settle the claim or show that it is not valid before strike-off is approved.

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