Closure of Limited Liability Partnership (LLP)

Yes, it is necessary to formally close a Limited Liability Partnership (LLP) if it is no longer trading or conducting business. Failing to properly close an LLP can lead to legal and financial consequences.
While the process of closing an LLP may involve administrative effort and expenses, it is a necessary step to formally terminate the partnership and mitigate potential risks associated with continuing operations or non-compliance with legal obligations.

The LLP must be inactive for at least one year, have zero assets and liabilities and no active bank account.

Closing a Limited Liability Partnership (LLP) involves several steps, which may vary depending on the jurisdiction and specific circumstances. Here's a general overview of the procedure:

1. Board Resolution: The designated partners of the LLP should convene a meeting and pass a resolution approving the closure of the LLP. The resolution should also appoint one or more partners as designated liquidators, if required.

2. Consent of Partners: Obtain the consent of all partners for the closure of the LLP.

3. Clearance of Debts and Liabilities: Ensure that all outstanding debts, liabilities, and obligations of the LLP are settled or adequately provided for. This includes payments to creditors, employees, and any other stakeholders.

4. Tax Clearance: Obtain tax clearance from relevant tax authorities, ensuring all taxes, including income tax, sales tax, and others, are paid up to date.

5. Asset Disposal: Liquidate or sell off the assets of the LLP, with proceeds used to settle outstanding debts or distributed among partners as per the LLP agreement.

6. Cancellation of Registrations: Cancel any registrations, licenses, permits, or certificates held by the LLP with regulatory authorities or government agencies.

7. Closure Application: Prepare and file the necessary closure application or form with the Registrar of Companies or equivalent authority. This may include forms specific to LLP closure, along with supporting documents such as financial statements, consent letters from partners, and a statement of assets and liabilities.

8. Publication of Notice: Publish a public notice of the LLP's closure in local newspapers or other designated publications as required by law. This is typically done to inform creditors and other interested parties.

9. Objections and Settlements: Address any objections or claims received during the closure process and settle them appropriately.

10. Dissolution Order: Once all requirements are fulfilled and there are no objections, the Registrar of Companies may issue a dissolution order, officially closing the LLP.

11. Notice of Dissolution: File a notice of dissolution with the Registrar of Companies and publish it in the official gazette or designated publication.

12. Final Compliance: Ensure all final compliance requirements are met, including filing final tax returns, submitting accounts, and other regulatory filings.

It's essential to follow the legal requirements and procedures specific to the jurisdiction where the LLP is registered and seek professional advice from legal advisors or company secretaries experienced in LLP closures to ensure compliance with all legal obligations.

Some jurisdictions may have provisions for closing an LLP under certain circumstances, even if annual filings have not been completed. While it may be theoretically possible to close an LLP without filing annual returns in certain circumstances, it's crucial to consider the specific legal requirements and potential consequences of non-compliance in the jurisdiction where the LLP is registered. Professional advice can help ensure that the closure process is conducted properly and in accordance with applicable laws and regulations.

PAN card copies, Aadhar proofs, and permanent addresses of all partners and designated partners are necessary, partner and creditor consent, an indemnity bond, a certified statement of accounts showing zero assets and liabilities, last filed income tax return, and confirmation of no outstanding liabilities to creditors, Provide a copy of the LLP agreement or the date of becoming a partner.