Thinking of closing a Limited Liability Partnership (LLP)?
If LLP is not functioning properly and wants to close down then there are several ways in which LLP can be dissolved. LLP can be closed by the partners voluntarily or the creditors can dissolve it voluntarily or it can be closed by the order of the court.
Ways of Closing LLP:
By Declaring the LLP as Defunct:
If a company wants to wind up its business either it must not be functioning properly or it must have not carried on business for atleast 1 year then can make an application to the Registrar for declaring the LLP as defunct and removing the name from its register.
By winding up of LLP either Voluntarily or by Tribunal:
- Voluntarily- If the partners mutually decide to wind up a company they can by sending application to the Registrar of its winding up.
- By Tribunal- LLP can also be wound up by the order of the court or by Tribunal
Procedure for winding up Voluntarily:
- Any LLP may be wound up voluntarily if the LLP passes a resolution to wind up the LLP with approval of atleast three-fourths of the total number of its partners.
- A copy of such resolution should be filed with the Registrar
- Where any LLP has creditors such LLP shall take approval of all the creditors before taking any action for winding up of LLP.
- If the designated partners voluntarily agree to appoint a Liquidator by giving him remuneration for carrying on winding up process, the Liquidator is so appointed for such winding up.
- Also where there are creditors, approval of such creditors are taken before appointing LLP liquidator or they may appoint separate liquidator.
- The LLP liquidator is allowed to have access to all books of accounts, loans, liabilities, etc and is required to inspect.
- Based on his inspection a report is prepared which is sent to the Tribunal for his approval and the Tribunal takes the decision and if satisfied with the report may pass order of dissolution of LLP.
Procedure for winding up by Tribunal:
- For winding up by Tribunal, a Petition is to be made before the Tribunal.
- The Tribunal on hearing the petition may accept it or dismiss it or may make an interim order.
- The Tribunal may also if thinks fit may appoint a Liquidator for the Limited Liability Partnership (LLP) till the final order of winding up is passed.
- The Tribunal may impose certain powers and duties on the Liquidator.
- The Liquidator is required to prepare a report based on the inspection of the LLP and should send a report to the Tribunal.
- The Tribunal may after giving opportunity of being heard to the Liquidator, designated partners, creditors, etc passes the order of closing of Limited Liability Partnership (LLP).
Who can file an application for winding up of the Company?
- LLP, or
- Its partners, or
- Any secured creditors, or
- Registrar or any person authorized by the Central Government, or
- Central or State Governments
How can Law Tarazoo help?
Our legal experts will help you through the entire process with ease.