Compliance Calendar LLP

Closing a business entity in India, whether it is a Limited Liability Partnership (LLP) or a Company, involves formal legal procedures. The processes ensure that the entity is dissolved properly, liabilities are settled, and compliance is met with the applicable laws.

1. Closure of LLP

The closure of  LLP in India is governed by the Limited Liability Partnership Act, 2008. The process is generally chosen when the LLP is no longer operational or wishes to cease its business activities.

Methods for LLP Closure
a. Voluntary Closure (Strike Off Method): Used when the LLP has no liabilities or has ceased operations.

Steps:

Consent of Partners: All partners must agree to close the LLP.
Prepare and File Documents:File Form 24 with the Registrar of Companies (RoC).
Submit an affidavit declaring the LLP has no debts and liabilities.
Provide the last bank statement and a resolution of closure.
Approval by RoC: Once verified, the RoC strikes off the LLP from its records.

b. Winding Up Through Tribunal:
Used for LLPs with liabilities or disputes among partners.

Steps:

File a petition for winding up before the National Company Law Tribunal (NCLT).
Submit detailed financial records and statements of liabilities.
Tribunal orders dissolution after hearing the case.

2. Closure of a Company

The closure of a company is governed by the Companies Act, 2013, and can be done through various methods.

Methods for Company Closure

a. Voluntary Strike Off:
Used for companies with no liabilities and inactive operations.

Steps:

Board Resolution: Obtain approval from the board and shareholders.
File Form STK-2: Submit the application for strike-off with supporting documents, including:Affidavit and indemnity bond from directors.
Statement of assets and liabilities.
RoC Approval: The RoC strikes the company off its register after verification.

b. Voluntary Liquidation:
For solvent companies that wish to wind up.

Steps:

Appoint a liquidator to settle assets and liabilities.
Conduct a shareholders’ meeting to approve liquidation.
File the final report with the RoC and obtain a dissolution certificate.

c. Compulsory Winding Up:
Initiated by creditors, tribunal, or regulatory authorities for defaulting companies.

Steps:

File a petition with the NCLT.
Tribunal appoints a liquidator to oversee the process.
Dissolution is ordered after settling debts.

Key Differences Between LLP and Company Closure
Aspect                           LLP Closure                              Company Closure
Governing Law           LLP Act, 2008                           Companies Act, 2013
Authority                     RoC and NCLT                          RoC and NCLT
Preferred Method      Strike Off or Tribunal              Strike Off or Liquidation
Complexity                  Relatively simple                      More complex

Closing a business entity in India, whether it is a Limited Liability Partnership (LLP) or a Company, involves formal legal procedures. The processes ensure that the entity is dissolved properly, liabilities are settled, and compliance is met with the applicable laws.

Conclusion
Both LLP and company closures process require adherence to strict legal procedures to ensure proper dissolution and compliance with Indian laws. Entities must ensure liabilities are cleared, and necessary documentation is submitted to avoid future legal complications. Seeking professional assistance can simplify the process and ensure timely closure.

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