Striking off an LLP (Limited Liability Partnership) in India refers to the process of removing the LLP from the register of companies, essentially terminating its existence as a legal entity. This is done under the provisions of the Limited Liability Partnership Act, 2008, and the procedure can be initiated voluntarily or by the Registrar of Companies (RoC) in certain circumstances.
Types of Striking Off an LLP
- Voluntary Strike Off (by the LLP itself)
- Strike Off by the Registrar of Companies (RoC)
1. Voluntary Strike Off (By the LLP itself)
An LLP can apply for voluntary striking off under Section 75 of the Limited Liability Partnership Act, 2008, if the LLP has ceased its business and operations and has no assets or liabilities.
Conditions for Voluntary Striking Off
The LLP can apply for voluntary striking off if:
- The LLP has ceased to carry on business or commercial operations for at least one year.
- The LLP has no outstanding liabilities (e.g., loans, dues).
- The LLP has no pending legal cases, notices, or disputes.
- The LLP is not involved in any activity related to the formation of new contracts or any form of business activity.
Procedure for Voluntary Strike Off
- Board Resolution:
- The LLP’s partners must pass a resolution agreeing to the striking off.
- Filing with RoC:
- File Form 24 (Application for Striking off) with the Registrar of Companies (RoC).
- Attach a copy of the Board Resolution and Form 11 (Annual Return) with the application. This form will need to confirm that the LLP has ceased operations and has no liabilities.
- If the LLP has not filed annual returns or financial statements for the last two years, it must file these documents along with the application for striking off.
- Affidavit and Indemnity Bond:
- The LLP partners must submit an affidavit confirming that the LLP has ceased to operate and has no liabilities.
- An indemnity bond (signed by all partners) stating that the LLP is not liable for any debts or obligations is also required.
- Publication:
- The RoC will examine the application and if satisfied, will issue a notice in the Gazette of India about the proposed striking off of the LLP.
- Notice of Striking Off:
- If the RoC receives no objections within 30 days of the notice, it will proceed with striking off the LLP, and the LLP will be removed from the register of LLPs. A notice confirming the striking off will be published.
2. Strike Off by the Registrar of Companies (RoC)
The RoC can strike off an LLP if it has not filed financial statements or annual returns for two consecutive years. The process is as follows:
- Non-Compliance: If the LLP fails to comply with filing requirements (e.g., not filing Form 11 or Form 8 for two consecutive years), the RoC may send a notice to the LLP for the non-compliance.
- Notice from RoC: The RoC will issue a notice to the LLP, giving it an opportunity to rectify the issue or provide a reason for non-compliance.
- Automatic Strike Off: If the LLP does not respond to the notice or fails to rectify the issue, the RoC can initiate the process of striking off the LLP from the register, effectively dissolving it.
- Publication: Similar to voluntary striking off, a notice will be published in the Gazette of India for public information, and the LLP will be removed from the register after a period.
Key Points to Remember About Striking Off an LLP in India
- Liabilities: If an LLP has liabilities or outstanding dues, it cannot apply for striking off. The LLP must clear all debts and liabilities before initiating the process.
- Tax Filings: Even if you are applying for striking off, the LLP must have cleared its tax filings, such as GST, income tax, and any other pending returns. If returns are not filed, the striking off process may not be approved.
- Dissolution: Striking off is different from dissolution. The LLP is effectively removed from the register and ceases to exist, but it does not automatically discharge any liabilities that may have existed. Dissolution may involve other legal steps to completely terminate the LLP, including addressing liabilities.
Example of a Striking Off Clause in an LLP Agreement
In some cases, an LLP agreement might include a provision for the voluntary dissolution or striking off of the LLP. A simple clause might look like this:
Striking Off Clause
“In the event that the LLP ceases to carry on business or operations, and no liabilities or pending legal obligations exist, the Partners may apply to the Registrar of Companies (RoC) for the striking off of the LLP in accordance with Section 75 of the Limited Liability Partnership Act, 2008. The application shall be made only after all outstanding debts, liabilities, and obligations have been cleared, and after the partners pass a resolution confirming that the LLP has ceased operations for at least one year. Upon receiving approval from the RoC, the LLP will be struck off the register and cease to exist as a legal entity.”