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Closure of Limited Liability Partnership (LLP) in Chennai

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Renuka M
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3 min read

Introduction

Closing a Limited Liability Partnership (LLP) in Chennai involves legal formalities and regulatory compliance to ensure a smooth dissolution process. Whether the LLP is inactive, unable to continue its business, or facing financial difficulties, following the correct procedure is essential to avoid penalties and liabilities.

Modes of Closure of LLP

An LLP can be closed using the following methods:

1. Voluntary Closure through Form 24

This is the most common method for closing an LLP when it is not carrying on any business activity.

Eligibility Criteria:

  • The LLP must not have carried out any business operations for at least one year.

  • There must be no pending liabilities, dues, or legal proceedings.

  • Consent from all partners is required.

Procedure for Voluntary Closure:

  1. Cease Business Operations: Ensure the LLP has not conducted business for at least one year.

  2. Obtain Partner’s Consent: All designated partners must agree to dissolve the LLP.

  3. Explicit Liabilities: Settle all outstanding debts, taxes, and liabilities.

  4. Prepare Documents:

    • A statement of accounts showing no assets or liabilities (not older than 30 days).

    • An affidavit from all partners stating that the LLP has no liabilities.

    • A copy of the latest Income Tax Return (if applicable).

  5. Filing of Form 24: Submit Form 24 along with the required documents to the Registrar of Companies (ROC).

  6. Approval by ROC: Upon verification, the ROC will issue a notice confirming the dissolution of the LLP.

2. Strike Off by ROC (Registrar of Companies)

The ROC may initiate the closure of an LLP if it is found to be inactive and non-compliant.

Conditions for Strike Off:

  • The LLP has not filed financial statements or annual returns for two consecutive years.

  • The LLP has not commenced business since incorporation.

  • There are no pending legal cases or liabilities.

Process:

  • The ROC will send a notice to the LLP and its partners.

  • If no response is received within the stipulated time, the LLP will be struck off from the records.

3. Closure through the Insolvency & Bankruptcy Code (IBC)

If the LLP is unable to pay its debts, it may undergo liquidation under the Insolvency & Bankruptcy Code (IBC).

Process:

  • Applying to the National Company Law Tribunal (NCLT).

  • Appointing a liquidator to manage the dissolution process.

  • Distribution of assets to creditors.

  • Final closure by the tribunal.

Documents Required for LLP Closure

  • PAN card and Aadhaar card of partners.

  • LLP agreement.

  • Affidavits and declarations from partners.

  • Consent letters from all partners.

  • Statement of accounts.

  • Income Tax Return acknowledgement (if applicable).

  • No-objection certificate (NOC) from creditors (if any).

Estimated Timeline and Cost

  • Timeline: The entire closure process can take 3 to 6 months, depending on regulatory approvals.

  • Cost: The government fees and professional charges may range from ₹5,000 to ₹15,000, depending on the complexity.

Conclusion

Adhering to legal procedures to close an LLP in Chennai ensures a hassle-free exit. Choosing the correct method based on the LLP’s status can help partners avoid future complications. Seeking professional assistance from legal experts can ensure compliance with the necessary regulations.

Closure of Limited Liability Partnership in chennai