Updated on June 27, 2025 12:33:36 PM
Closing a Limited Liability Partnership(LLP) firm, is a complex process that requires careful consideration and adherence to legal procedures. Limited Liability Partnerships (LLPs) are no exception when it comes to closure of LLP. Whether due to business success, strategic shifts, or financial challenges, the closure of an LLP(Limited Liability Partnership) involves various legal and procedural steps. Go through the page to explore the reasons for LLP closure, the legal obligations involved, the step-by-step process, and the potential challenges that LLP owners may encounter. As the business landscape evolves, it's essential for LLP owners to equip themselves with the knowledge to gracefully conclude one chapter and look forward to new opportunities.
Limited Liability Partnership (LLP) company, upon successful registration with the Ministry of Corporate Affairs, operates with the goal of achieving its objectives. However, there are instances where closure becomes necessary for an LLP and OPC due to various reasons such as financial difficulties, changes in market demand, strategic shifts, or legal compliance issues. The process of closing an LLP involves winding down operations, settling debts, distributing assets, and deregistering with the Ministry of Corporate Affairs (MCA).
The closure of an LLP company involves a structured process of winding down its operations and officially dissolving the entity. This becomes necessary when the company faces challenges in meeting its objectives, encounters financial difficulties, undergoes strategic changes, or decides to cease operations. The LLP company closure process encompasses several key steps, including convening a meeting, appointing a liquidator, settling debts and liabilities, distributing assets, filing a closure application, and obtaining a closure certificate.
Similar to the closure of a private limited company, the first step in the closure of an LLP company is to convene a meeting with all the designated partners. The partners must gather to discuss and decide on the winding-up process. A notice of the meeting must be sent to all partners at least 14 days before the scheduled date of the meeting.
The partners or the designated authority may appoint a qualified individual as the liquidator. The liquidator is responsible for overseeing the winding-up process, managing assets, settling debts, and ensuring a smooth transition to closure.
The liquidator must identify, verify, and list all outstanding debts and liabilities of the LLP. This involves a comprehensive examination of financial records, communication with creditors, and notifying them of the winding-up process. A qualified valuer should assess the value of the LLP's assets. After settling debts and liabilities, the liquidator distributes remaining assets among the partners according to their respective interests.
The liquidator files Form 24 with the Ministry of Corporate Affairs (MCA) to deregister the LLP and initiate the formal closure process. This form serves as official notification to the MCA, triggering the process of deregistration.
After successful completion of the winding-up process and compliance verification, the MCA issues a closure certificate, officially marking the end of the LLP's existence. The liquidator must retain all related records for at least eight years from the date of issue.
Here is the list of documents required forClosure of LLP Company are:
The total cost of closure of LLP(Limited Liability Partnership) is ₹ 21,999 which includes government fee and professional filing fee of Professional Utilities.
| One Person Company(OPC) Closure | Fees |
|---|---|
| Government Fee | ₹10,000 |
| Professional Fee | ₹11,999 |
| Total Fee | ₹21,999 |
Note: The aformentioned Fees is exclusive of GST.
Note: For the purpose of company closure a professional fee is charged by the company secretary, and an additional fee for Documents Processing and auditing(Notary and Stamp Paper).
Conclusion
Closing an LLP company involves a detailed and multifaceted process. Seeking professional advice is crucial to ensure compliance with all applicable laws and regulations issued by the Ministry of Corporate Affairs. Both voluntary winding up, initiated by partners, and compulsory winding up, initiated by a court order, result in the dissolution of the LLP and its removal from the register of companies.
The decision to close an LLP company is often a complex one, driven by a combination of factors. While cessation of business operations and financial difficulties are common reasons, other considerations such as mutual agreements, non-compliance with regulations, changes in business objectives, or loss of key customers can also trigger the closure process of an LLP firm. For more information, reach out to our team at Professional Utilities.
At Professional Utilities, we leverage our industry knowledge and expertise to help businesses navigate complex regulations, minimize risks, and optimize operations for maximum efficiency and profitability.
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Voluntary winding up is initiated by the LLP's partners, while compulsory winding up is initiated by a court order. Voluntary winding up is typically used when the LLP is solvent and closing down is in its best interest. Compulsory winding up is used when the LLP is insolvent with no reasonable prospects of paying off debts.
The time to close down an LLP varies based on complexity. Voluntary winding up can take 3 to 12 months, while compulsory winding up can take 6 to 18 months.
The cost incurred in closing an LLP company is 21,999 which includes government fee as well as professional fees of Professional Utilities.
Yes, in both voluntary and compulsory winding up, a liquidator must be appointed to oversee the process, realizing assets, paying debts, and distributing remaining assets.
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