WINDING UP OF LLP 2022
DEFINITION:
An LLP or Limited Liability Partnership is a business entity that was introduced in India through the LLP Act, 2008. An LLP enjoys audit exemption, if the annual turnover of the said LLP doesn’t exceed INR 40 lakhs/or the capital contribution in the LLP is less than Rs.25 lakhs. This is the reason why an LLP is very popular amongst businessmen these days. But, due to unforeseen reasons, it may be deemed necessary to windup a LLP.
A LLP winding 2022 up can be done voluntarily or by a Tribunal. If a LLP is to initiate winding up voluntarily, then the LLP has to pass a resolution to wind up the LLP with approval of at least three-fourths of the total number of Partners. If the LLP has any lenders, secured or unsecured, then the approval of the lenders must be required to wind up of the LLP in India.
WINDING UP OF LLP BY TRIBUNAL
- The LLP has decided to be wound up.
- There have been less than two Partners in the LLP for a period of more than 6 months.
- The LLP isn’t in a position to pay off its debts.
- The LLP has acted against the interests of the sovereignty and integrity of India, the security of State or public order.
- The LLP has not filed with the Registrar Statement of Accounts and Solvency/or filed LLP Annual Returns for five continuous financial years.
- The Tribunal is of the opinion that it is just and equitable that the LLP must be wound up.
PROCESS TO WIND UP AN LLP
A resolution to winding up of LLP has to be passed and filed with the Registrar within 30 days of passing of the resolution. Once the resolution to wind up of LLP has been passed then it’s understood that the voluntary winding up has commenced. Once, the resolution for winding up of LLP is filed with the Registrar, the majority of Partners (not less than two) must make a declaration verified by an affidavit which states that the LLP has no debt /or that it will be in a position to pay its debts in full within a period, as mentioned in the declaration, but which doesn’t exceed one year from the date of commencement of winding up of LLP. Along with the Affidavit signed by the majority Partners, the below mentioned documents have to be filed with the Registrar within 15 days of passing of the resolution for winding up of LLP:
- The statement of assets and liabilities for the period from last accounts closure to date of winding up of LLP attested by at least two partners
- The report of valuation of the assets of the LLP prepared by a valuer, if the LLP possesses any assets
WINDING UP OF LLP WITH CREDITORS
If a LLP which has decided to wind up has any secured or unsecured creditors, then before taking any action, the approval for winding up of LLP has to be requested from the creditors. The creditors are required to give their opinion on the winding up of LLP within 30 days of receipt of request for approval for winding up. If the winding up of the LLP is in the interest of all partners and all creditors then the LLP can start with the voluntary winding up process.
APPOINTMENT OF LLP LIQUIDATOR
A LLP Liquidator has to be appointed within thirty days of the voluntary winding up resolution In case the LLP has any creditors, then the appointment of a LLP Liquidator will only be valid if it is approved by two thirds of the creditors in value of the LLP. It is the job of the LLP Liquidator to perform the functions and duties for winding up of LLP. The LLP Liquidator must settle the creditors and adjust the rights of the partners, whatever the case may be. While discharging his or her duties, the LLP Liquidator must maintain proper books of accounts pertaining to the winding up of the LLP.
FILING OF WINDING UP REPORT BY LLP LIQUIDATOR
Once, the affairs of the LLP are fully wound up, the LLP Liquidator will prepare a report that describes the manner in which the winding up of LLP has been conducted, how the property of the LLP has been sold off. If two thirds of the number of partners and creditors are satisfied with the winding up report prepared by the LLP Liquidator, then a resolution is passed by the partners for winding up of accounts and explanation for dissolution. The LLP Liquidator then sends the LLP winding up report with the resolution to the Registrar and files an application with the Tribunal.
DISSOLUTION OF THE LLP
If the Tribunal is satisfied that due process have been followed in winding up of the LLP, then the Tribunal will pass an order that the LLP shall stand dissolved. The LLP Liquidator is then required to file the copy of the order from the Tribunal with the Registrar for winding up of LLP. The Registrar on receiving the copy of the order passed by the Tribunal, for winding up of LLP would publish a notice in the official gazette that the LLP stands dissolved.
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