Winding up a Limited Liability Partnership (LLP) in India involves formally closing down the business, settling any outstanding liabilities, and distributing remaining assets. The process can be initiated voluntarily by the partners or by the order of a tribunal. Here’s a step-by-step guide to the winding-up process for an LLP in India:
Voluntary Winding Up: Initiated by the partners of the LLP.
Solvent LLP: If the LLP is solvent and can pay its debts.
Insolvent LLP: If the LLP is insolvent and cannot pay its debts.
Winding Up by Tribunal: Ordered by the National Company Law Tribunal (NCLT) due to insolvency or other reasons.
Solvent LLP
Board Meeting:
Pass Resolution: The partners pass a resolution to wind up the LLP voluntarily.
File Declaration of Solvency: A declaration that the LLP is solvent and can pay its debts in full within a specified period.
General Meeting:
Pass Special Resolution: Partners must pass a special resolution to wind up the LLP.
Appoint Liquidator: Appoint a liquidator to manage the winding-up process.
File with Registrar:
File Form 14: Submit the special resolution and the declaration of solvency with the Registrar of Companies (ROC).
File Form 15: File Form 15 to appoint the liquidator and notify the ROC.
Liquidation Process:
Settle Debts: The liquidator will settle all debts and liabilities of the LLP.
Realize Assets: The liquidator will sell the assets of the LLP.
Distribute Surplus: Distribute any remaining surplus to the partners.
Final Meeting:
Hold Final Meeting: After completing the liquidation, hold a final meeting of the partners.
Pass Resolution: Pass a resolution to approve the liquidator’s report and accounts.
File Form 18: File Form 18 to notify the ROC of the final meeting.
Obtain Dissolution Order:
Apply for Dissolution: Apply to the ROC for the dissolution of the LLP.
Receive Dissolution Certificate: Once the ROC is satisfied, it will issue a dissolution certificate.
B. Insolvent LLP
Board Meeting:
Pass Resolution: The partners pass a resolution to wind up the LLP.
File Declaration of Insolvency: A declaration that the LLP is insolvent and cannot pay its debts.
General Meeting:
Pass Special Resolution: Partners pass a special resolution to wind up the LLP.
Appoint Liquidator: Appoint a liquidator to handle the process.
File with Registrar:
File Form 14: Submit the special resolution and the declaration of insolvency with the ROC.
File Form 15: File Form 15 to appoint the liquidator and notify the ROC.
Liquidation Process:
Settle Debts: The liquidator will handle the settlement of debts as far as possible.
Realize Assets: The liquidator will sell the assets of the LLP.
Distribute Proceeds: Distribute the proceeds to creditors and, if any, to partners.
Final Meeting:
Hold Final Meeting: Hold a final meeting of the partners.
Pass Resolution: Approve the liquidator’s final report and accounts.
File Form 18: Notify the ROC of the final meeting.
Obtain Dissolution Order:
Apply for Dissolution: Apply to the ROC for the dissolution of the LLP.
Receive Dissolution Certificate: The ROC will issue a dissolution certificate once all procedures are completed.
File Petition with NCLT: A petition can be filed with the National Company Law Tribunal (NCLT) for winding up.
NCLT Hearing: The tribunal will hear the petition and may pass an order for winding up if the grounds are valid.
Appointment of Liquidator: NCLT appoints a liquidator to manage the winding-up process.
Liquidation Process: Follow the same liquidation procedures as in voluntary winding up.
Final Hearing: NCLT will conduct a final hearing to approve the winding-up process.
Order of Dissolution: NCLT will issue an order for the dissolution of the LLP.
Form 14: For filing special resolution and declaration of solvency/insolvency.
Form 15: For appointing the liquidator.
Form 18: For filing details of the final meeting.
Liquidator’s Report: For final meeting and dissolution.
Winding up an LLP is a structured process that requires careful adherence to legal procedures. Whether voluntary or through a tribunal, ensuring accurate and timely completion of all steps is crucial to avoid legal complications and penalties. Engaging a legal advisor or financial expert can facilitate smooth handling of the process and ensure compliance with statutory requirements. Proper management during the winding-up process protects the interests of all stakeholders and ensures a clean closure of the business