Overview
A Limited Liability Partnership (LLP) has become a popular business structure in India because it combines the benefits of limited liability with operational flexibility. Compared to companies, LLPs have fewer compliance requirements, making them especially attractive for startups and small businesses.
However, when an LLP ceases operations, remains dormant or is no longer required, it must be formally closed. Proper closure ensures that the LLP is legally removed from the records of the Ministry of Corporate Affairs (MCA) and protects partners from ongoing compliance obligations or penalties.
Key points:
1. Governed by the LLP Act, 2008 and LLP Rules, 2009 (Rule 37 for strike-off).
2. Closure can be:
- Voluntary Strike-Off (application by partners), or
- Compulsory Strike-Off (initiated by ROC for non-compliance).
3. The most common method is voluntary strike-off by filing Form 24 with the Registrar of Companies (ROC).
4. From 2023, all strike-off applications are processed centrally through C-PACE (Centre for Processing Accelerated Corporate Exit), which has significantly reduced timelines.
Types of LLP Closure
1. Voluntary Strike-Off (by Application)
- LLP applies for closure by filing Form 24.
- LLP should not have carried on any business or operations for at least one year.
- All liabilities are settled, bank account is closed and consent of all designated partners is obtained.
- A statement of accounts (nil assets and liabilities), certified by a Chartered Accountant (CA), not older than 30 days, must be submitted.
- If the LLP never commenced business, income tax return filing is not required; otherwise, the latest ITR acknowledgment must be attached.
2. Compulsory Strike-Off (by ROC)
- If an LLP fails to file annual returns (Form 8 & Form 11) for two or more consecutive financial years, the ROC may strike it off under Rule 37(1)(a).
- ROC issues a notice to the LLP and designated partners. If no response is received, the LLP is struck off from MCA records.
Note: Voluntary closure is generally preferable as it allows partners to properly settle matters and avoid penalties.
Why Close an LLP?
Common reasons include:
- LLP never commenced business.
- Business was discontinued due to losses, disputes or restructuring.
- Dormant LLP not generating revenue.
- To avoid penalties for non-filing of annual returns.
- Merger, conversion or change in business structure.
Eligibility for LLP Closure
Before applying for strike-off, the LLP must ensure:
- No business or operations for at least one year.
- All liabilities, loans and statutory dues are cleared.
- LLP’s bank account is closed (or declaration given if no account was ever opened).
- Consent of all designated partners.
- Statement of Accounts certified by a CA, not older than 30 days.
- All pending annual returns (Form 8 & Form 11) are filed up to the year of cessation.
- Latest Income Tax Return acknowledgment filed (if LLP had commenced business).
- Approval of sectoral regulator, if LLP is governed by a special law.
Process of Voluntary LLP Closure (Strike-Off under Form 24)
- Consent of Partners – Obtain approval from all designated partners.
- Clear Liabilities – Repay all loans, creditors and statutory dues.
- Close Bank Account – Obtain a certificate/letter from the bank confirming account closure (or declaration if no account was ever opened).
- Prepare Affidavit & Indemnity Bond – Each partner must declare that the LLP has no debts/liabilities and indemnify for any future claims.
- Prepare Statement of Accounts – Certified by a CA, showing nil assets and liabilities (not older than 30 days).
- File Form 24 with MCA – Attach all required documents and pay prescribed fees.
- Examination by C-PACE/ROC – MCA reviews the application. In voluntary strike-off, ROC is not required to issue a prior notice of intention, but MCA may still publish notice of strike-off on its portal.
- Dissolution – Once approved, the LLP’s name is struck off from MCA records, and it stands dissolved.
Documents Required for LLP Closure
- Copy of LLP Agreement (if not filed earlier with MCA).
- Statement of Accounts (certified by CA, not older than 30 days).
- Affidavit by partners (no liabilities).
- Indemnity Bond signed by partners.
- Consent of all partners.
- Proof of bank account closure / declaration if no account was ever opened.
- Copy of Income Tax Return acknowledgment (if filed).
- Regulatory approval, if governed by a special law.
Common Challenges in LLP Closure
- Pending Annual Returns – Non-filing of Form 8 or Form 11 can lead to rejection.
- Bank Closure Delays – Banks may take weeks to issue closure certificates.
- LLP Agreement Issues – If not filed earlier or if there are discrepancies, MCA may raise queries.
- Unsettled Creditors – Even minor dues can block strike-off.
- Processing Delays – C-PACE has improved timelines, but objections or discrepancies may still cause delays.
Post-Closure Compliance
- After strike-off, the LLP is no longer required to file Form 8 or Form 11.
- Partners are relieved of future compliance obligations.
- However, partners remain personally liable for acts, debts or liabilities incurred before closure.
- Records should be preserved for at least 8 years, in case of future inquiries or legal issues.
Fees for LLP Closure
- Government fees for Form 24 depend on LLP contribution slabs (prescribed under LLP Rules, 2009).
- Professional fees (CA/CS/legal advisors) vary depending on complexity and documentation.
Timeline for LLP Closure
- Preparation of documents: 2–4 weeks.
- Processing by MCA / C-PACE: usually 1–2 months, though it may extend in case of objections.
- Total timeline: Generally, 2–3 months in straightforward cases.
FAQs
The most common method is voluntary strike-off by filing Form 24 with the Registrar of Companies (ROC). This method is faster, cost-effective and allows partners to close the LLP with proper documentation.
No. The LLP must have ceased business or operations for at least one continuous year before applying for voluntary strike-off under Rule 37 of the LLP Rules, 2009.
- If the LLP commenced business, the latest Income Tax Return acknowledgment must be attached with Form 24.
- If the LLP never commenced business, ITR filing is not required.
An LLP cannot be struck off if it has unpaid loans, dues or statutory obligations. Partners must settle all liabilities and submit an affidavit and indemnity bond confirming nil liabilities and indemnifying against any future claims. If unpaid creditors exist, ROC will reject the closure application.
For voluntary strike-off, public notice is not mandatory. However, MCA may still publish the closure details on its portal for transparency. This is different from ROC-initiated (compulsory) strike-offs, where notices are issued to allow objections.
All pending annual returns up to the year the LLP ceased operations must be filed before applying for strike-off. Non-compliance is a common reason for rejection or delays in the closure process.
Since 2023, all LLP strike-off applications are processed centrally through C-PACE (Centre for Processing Accelerated Corporate Exit). This has significantly reduced timelines and in many straightforward cases, closures can be completed in 1–2 months.
Yes. While partners are relieved from future compliance obligations, they remain personally liable for any debts, obligations or the legal proceedings incurred before closure. It is recommended to retain LLP records for at least 8 years for tax and legal purposes.
Yes. A certificate or letter from the bank confirming account closure must be submitted. If the LLP never opened a bank account, a declaration signed by the partners stating this is sufficient.
The process generally takes 2–3 months:
- Document preparation: 2–4 weeks
- MCA / C-PACE processing: 1–2 months
Delays may occur if documents are incomplete, annual returns are pending, liabilities are unsettled or objections arise. In most straightforward cases with all documentation in order, the closure can be faster.
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