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Winding up of LLP where LLP ceased to carry on Business or not carried out any business operation since Incorporation
In the Present Startup Ecosystem most startup start their business operation by forming most liked business structure Limited Liability Partnership, while some startups run successfully while other have to shut down due no business in the market or any other reasons. Now Startup Founders left with confusion has what they have to do in order to get out of legal compliance they are mandatory required to do even with NIL revenues. Now they have three options to manage their LLP :
- Change the Business Business Objects , Partners of LLP for Another Project : In this case if you have another project in Mind than you can continue that project in the Existing LLP by changing in Business Objects by Alteration in LLP Agreement , if in you new project you have new partner you may also change the partners at the same time. You may also change the name and business address of LLP.
- Sell LLP to any other Person : In this case you may sell whole of LLP to any other person who are in need of LLP. Once all the formalities are completed you are free from all the liabilities of LLP and in future course you are not liable for any compliance or actions, simply because you are now not associated with LLP.
- Closer of LLP : You may shutdown the LLP , for that your LLP must meet certain conditions as par recent rules notified by Ministry of Corporate Affairs. Here are the details of conditions required to be fulfilled by LLP
- LLP is required to file form 24 with ROC.
- LLP is required file overdue returns in Form 8 and Form 11 up to the end of the financial year in which the limited liability partnership ceased to carry on its business or commercial operations before filing Form 24.
- Attachments required for Form 24: (a) a statement of account disclosing nil assets and nil liabilities, certified by a Chartered Accountant in practice made up to a date not earlier than thirty days of the date of filing of Form 24;(b) an affidavit signed by the designated partners, either jointly or severally, to the effect,—(i) that the Limited Liability Partnership has not commenced business or where it commenced business, it ceased to carry on such business from ………….(dd/mm/yyyy); (ii) that the limited liability partnership has no liabilities and indemnifying any liability that may arise even after striking off its name from the Register; (iii) that the Limited Liability Partnership has not opened any Bank Account and where it had opened, the said bank account has since been closed together with certificate(s) or statement from the respective bank demonstrating closure of Bank Account;(iv) that the Limited Liability Partnership has not filed any Income-tax return where it has not carried on any business since its incorporation, if applicable.(c) a copy of the acknowledgement of the latest Income-tax return filed under the Income-tax Act,1961 (43 of 1961) and the rules made thereunder for the time being in force, where the limited liability partnership has carried out any business and has filed such return. (d) copy of the initial limited liability partnership agreement, if entered into and not filed, along with changes thereof in cases where the Limited Liability Partnership has not commenced business or commercial operations since its incorporation.
Explanation.—The date of cessation of commercial operation is the date from which the Limited Liability Partnership ceased to carry on its revenue generating business and the transactions such as receipt of money from debtors or payment of money to creditors, subsequent to such cessation will not form part of revenue generating business.”
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