LLP Strike Off: Striking Off Name of Defunct LLP
LLP Strike Off: Striking Off Name of Defunct LLP
When a Limited Liability Partnership (LLP) ceases to carry out any commercial activity, including providing services, for one year or more, it can voluntarily apply to the Registrar of Companies (ROC) for an LLP Strike Off. According to Section 63 of the Limited Liability Partnership Act, 2008, and Rule 37 concerning the striking off of the name of a defunct LLP, if the LLP is not carrying on business for two or more years, the Registrar can strike off the LLP. This process ensures that only active and compliant LLPs remain registered, maintaining the integrity of the business registry. This article provides you with important information and procedures regarding LLP Strike off.
What is LLP Strike Off?
An LLP strike-off is the process of formally closing down a Limited Liability Partnership (LLP). This can be done if the LLP is no longer doing business or has been dormant for one year or more. The process involves submitting Form 24 with the consent of all partners. The Registrar will then issue a notice to the LLP and its partners, allowing them to object within a month. If no objections are raised, the LLP’s name is removed. Complying with this process is crucial, as failure can result in severe penalties and punishments. Therefore, formally dissolving an inactive LLP is recommended to avoid future liabilities and legal issues.
Strike off of LLP Procedure
The procedure for strike off of LLP can be initiated by the Registrar or by the LLP in e-Form 24 with the consent of ‘ALL’ partners. On receiving the application, the Registrar would send a notice to all the partners of their intention to remove the name of the limited liability partnership from the register. And, request them to send their representations along with copies of the relevant documents, if any, within one month from the date of the notice. The notice for striking off the name of LLP is also placed on the MCA website for the information of the general public.
On completion of the time mentioned in the notice, if there are no adverse representations or objections from the LLP partners or general public, the Registrar could (if satisfied) strike off the LLP name from the register and publish a notice in the Official Gazette. On publication of notice of striking off the name of LLP in the Official Gazette, the limited liability partnership would stand dissolved.
Note: The Registrar can provide an order for striking off the name of LLP only if he/she is satisfied. The Registrar must also satisfy him or herself that sufficient provision has been made for the realization of all amounts due to the limited liability partnership and for the payment or discharge of its liabilities and obligations by the limited liability partnership within a reasonable time.
Partners’ Liability After Striking Off
In case of striking off the name of LLP, the liability of all designated partners of the limited liability partnership would continue. It may be enforced as if the limited liability partnership had not been dissolved.
Also, if any partner or creditor feels aggrieved by the LLP having been struck off the register, an application can be made to the Tribunal for restoring the LLP before the expiry of five years from the publication in the Official Gazette. If satisfied with the application for restoration of LLP, a Tribunal can order the LLP be restored to the register and place all partners in the same position as nearly as if the name of the LLP had not been struck off.
Consequences of Non-Striking Off LLP
A dormant or non-functioning LLP that fails to comply with statutory requirements can face severe legal issues. The LLP’s officers, including directors and partners, may be subject to substantial fines, penalties, and disqualification from forming new LLPs. To mitigate these risks and avoid potential future liabilities, formally dissolve an inactive LLP. This proactive approach can safeguard the personal and financial interests of the involved parties.
MCA Notification on Limited Liability Partnership (Amendment) Rules, 2024
On August 5, 2024, The Ministry of Corporate Affairs (MCA) issued a notification introducing significant amendments to the Limited Liability Partnership (LLP) Rules, 2009, focusing on streamlining the LLP strike-off process. The new amendment rules introduce the Centre for Processing Accelerated Corporate Exit (C-PACE) as an additional authority, along with the Registrar, to handle the operations of the LLP name strike-off or Form 24 applications. The applicable changes are made in Chapter XIV.
Striking Off Name Of Defunt LLP under LLP amendment rules, 2009. It may be called Limited Liability Partnership (Amendment) Rules, 2024. This LLP amendment rule comes into effect on August 27, 2024.
Here is the official MCA notification regarding the Limited Liability Partnership (Amendment) Rules, 2024,
mca-notification-of-llp-strike-off-centre-for-processing-accelerated-corporate-exit