WINDING UP OF AN LLP

The Winding up process of the LLP can be initiated by a tribunal for the following reasons:

• If the LLP wants to wind up

• If there are less than two partners in the LLP which is below the prescribed threshold set for the LLP for more than 6 months

• The LLP is not able to pay its debts

• The LLP has acted against the interest of the jurisdiction and the rectitude of India, the specified security of the state or public order.

• The LLP has not filed the statement of accounts and solvency or the LLP annual returns for the last five consecutive financial years with the Registrar of companies.

• The Tribunal thinks that is sensible that the LLP should windup.

The LLP winding-up process can be easily initiated with the approval of 3/4th number of its partners. To begin with the liquidation process for the LLP the designated partners need to file 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 occur by LLP. 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.

A valuation of the assets that are applicable to the LLP should be prepared and submitted, in case of any assets available at the time winding up of LLP. Voluntary winding up the LLP will be effective from the start date of passing the resolution of voluntary winding up of the LLP.

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

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

Along with the affidavit signed by the majority number 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 duly signed by at least two partners, Report of the valuation of the assets of the LLP prepared by the LLP if there are any.

The majority numbers of the partners are needed to declare in 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.

After passing the resolution of winding up and also receiving the consent from the creditors for winding up within 14 days, the LLP is now needed to publish an advertisement regarding the resolution of the winding up in a newspaper that is circulated in the jurisdiction where the registered office is situated or where the office of the LLP is registered.

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

The creditors also have an option to nominate an LLP liquidator and in case of the immediate appointment by the creditors and the partners, the LLP liquidator that is appointed by the creditors will come to existence. If the liquidator is not working then the tribunal will be appointing an LLP liquidator.

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

In case two-thirds number of Partners and creditors of the LLP 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 needed to send this LLP winding up report along with the resolution to the Registrar and file an application with the tribunal.

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 of LLP have been discharged, the assets have been liquidated; a report will be submitted 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 details of the property which has been disposed of. Once the approval of the partners, the creditors are sought for dissolution.

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 ministry of corporate affairs and now it is possible to windup the LLP easily by just making an application to the Registrar of companies 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 troublesome. But, the introduction of new LLP form 24 under the new amendment has made the whole winding up process very easy and simple.

Once the process of Winding up begins a company is not allowed to operate 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.