LLP Closure in Fast Track Exit Mode

If you are running an LLP but there is no business being carried on, the best thing to do is to close it in the Fast Track Exit (Mode) Mode. What it means is if your LLP have no business since incorporation or there is no business in the last year, it is best to close the LLP legally and stop complying with routine compliances.

Why you should consider the LLP strike-off

It is important to understand that any LLP which is registered under MCA gets its legal birth through a Certificate of Incorporation. Being a Designated Partner of the LLP, leaving it as it is without meeting compliance is the wrong idea. Also, if you are meeting compliance every year but there is no certainty of business to be done in the future, it will only be consuming your money and no return.

Eligibility for LLP Strike Off:

If any LLP registration wants to shut down its business operation or where it is not carrying on any business operations for the period of one year or more, the LLP is allowed to make an application to the Concerned Registrar of Companies by filing Form 24 at MCA for declaring the LLP as defunct and removing the name of the LLP from its register of LLP’s maintained by the ROC Office.

Form 24 for closure of LLP can be done on the following conditions:

• Inoperative from the date of incorporation or inactive for a period of at least one year;
• Does not have any assets/liabilities as of the date of application;
• Obtains the consent of the parties i.e any other authority, creditors and partners;
• Bank Account of the LLP has been closed; and
• Income Tax Return of the LLP has been filed.
• The LLP should have NIL Assets and Liabilities as on date.
• LLP should not have started business since its incorporation or one year must have lapsed since the LLP had its last business operation.
• The bank account of the LLP must have been closed.
• It is important to check that there is no liability from LLP Part.
• LLP is required file overdue returns in Form 8 and Form 11 up to the end of the financial year in which the limited liability partnership ceased to carry on its business or commercial operations before filing Form 24.
• An Affidavit and Indemnity Bond are required to be executed.
• An Application to ROC for the closure of LLP.
• KYC of the Partners to be attached.
• Statement showing NIL Assets and Liabilities by Practicing CA.

Note: Approval of this form shall not be allowed if any other form is pending for approval or for payment of fee against the LLP. Upon approval of this Form, the status of the LLP shall be changed to ‘Struck off (defunct)’.