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What is the winding up of an LLP?
A limited liabilities partnership that were introduced through the LLP Act 2008, in India. This LLP has the audit exemption if the capital contribution is less than Rs.25lakhs or the annual turnover is less than Rs.40lakhs.
A Limited Liability Partnership is like a general partnership in which all the partners have limited liabilities under certain legal rules and regulations are more complex than the traditional partnership. Here the procedure to close the LLP more streamlined than partnership.
Winding up of an LLP by the tribunal
• The LLP can be initiated forwinding up.
• There will be no more than two partners in the LLP for more than 6 months.
• If the LLP is not in a stage to pay the debts
• Against the interest of the sovereignty and the integrity acted by the LLP in India, the specified security of the state or public order.
• The opinion of the Tribunal is just and equitable that the LLP is wound up.
Voluntary winding-up of an LLP
Voluntary winding up process for LLP takes place when the partners decide themselves to discontinue LLP. Approval of ¾ of the partners can be initiated. Designated partners who are in the LLP make declaration that the company doesn’t have any debtor the debt will clear totally within one year from the process of winding up takes place.
The resolution must be filed with the registrar on Form 1 with in the 30 days of resolution is passed. Voluntary winding up for LLP.It is little longer process.
Declaration statements must be prepared along with the liabilities and assets statements. LLP partners need to be declared for not winding up because of any fraud. A valuation to the LLP is prepared and submitted, in any assets case. The resolution passing for the reason of voluntary winding up of the LLP will be effective from the start date.
Procedure to Windup LLP
Liquidation is a process of converting companies assets to cash, those funds are used to repay the company funds.
The process of winding up of an LLP first we have to initiate a resolution that must be passed and within 30 days filed with the
registrar .Voluntary winding up resolution for LLP is deemed to commence.
After filling the resolution for winding up of LLP with the registrar, declaration which is verified by the maximum number of partners by an affidavit that effect the LLP with no debt. After signing the affidavit by majority of the Partners, along with these some documents are also used that should be filled with the registrar within 15days after passing the resolution for dissolve of LLP.
1. The valuation report prepared by the valuer which contain the assets of the LLP and if there are any.
2. Date of winding up of LLP attested by at least two partners consists of statements of the assets and liabilities for the period of last two account closure.
Winding up with the Creditors
Creditors winding up are commonly used to describethe insolvent liquidation process of the company.Within the specified time the directors are unable to make such declaration of solvency, the winding-up shall be known as the creditor’s voluntary wind-up.
Acompany is already in voluntary winding up, if it is satisfied that it is necessary to do in the interests of the company’s creditors and contributories. Wind up of the company will still granted leave bythe Court.
The partners must announce Form 2 that they have no unpaid sums and they will clear all the debts if any, the date the resolution is passed within a specified period of time that is not more than a year.
Publication of the resolution
Appointment of the LLP Liquidator
The liquidator in LLP shall be appointed after the approval of 2/3 rd of the creditors. By the fixed remuneration a voluntary liquidator as the LLP liquidator is appointed, after the majority of partners have approved by obtaining through the resolutions.
A choice to nominate an LLP liquidator can have by the creditors .if instant appointments carries then both creditors and partners are involved, the creditors who appoint the LLP liquidator will come to existence. The Tribunal will appoint the LLP liquidator if the liquidator is acting.
Filing of winding up by a Liquidator
A notice for the appointment of liquidator need to be filed with registrar ,with 10 days of passing a resolution to close the company.
The LLP liquidator need to prepare a report which states hw winding up of the LLP conducted after the affairs of the LLP is completely wound up.If the 2/3rd members of the partners and creditors satisfies the report for winding up which is prepared by the LLP liquidator, a resolution is passed for winding up the accounts by the partners.
After that the LLP liquidator send this LLP winding up reports with the resolution attached to the registrar and file an application for winding up process with the tribunal.
Dissolution
The LLP is a corporate and an artificial formed body by the legal process called “incorporation”. If this body comes to an end by other legal process called” Dissolution”. After the affairs of the LLP are wind up a report was made by the LLP liquidator regarding the liabilities a d the assets that has been liquidated a report made by the liquidator in Form 9 which state that the company has been wind up and the final accounts are being closed and detailed explanation of the property of the company has been disposed of.
After the approval of Partners and Creditors the dissolution is soughted.on the dissolution process the name will be struck ,the record in ROC and facts are published in the official gazette.
The Striking off LLP are governed by the Rule37(1) of the limited liability of partnership Rules ,2017.According of the striking off are of two types .They are
1.Mandatory Striking off the LLP . It mandatory striking off if the LLP Company doesn’t file Form 8 and Form 11 for not filling these forms for previous two years. Then the ROC has the reasonable cause to believe that the LLP is not doing a business.
the notice date given within a period of one month of that . the register and requesting them to send their representations with the name of LLP and ROC can send a notice to the LLP to strike off the name of the company.
Voluntary Striking off the LLP: Under the Voluntary striking off the LLP then it make an application in e-form 24 .
All the partner of the LLP for striking off the name from the register with the registrar. The notice issued by the ROC and the application which is made by the LLP Placed on the website of MCA for information of general public for a period of one month.
What happens after the winding-up on an LLP?
After the process of winging up of the company begin, the business in the company is not allowed to pursue.LLP has to complete the liquidation of the assets to distribute between all the shareholders, creditors and all others if any.
Then the partners make sure that the declaration that is verified by an affidavit and by the end there will be no debts and the company may dissolve and effectively cease.