FAQ’s closure of Limited Liability Partnership- Series 407
FAQ’s closure of
Limited Liability Partnership
In this Flash
Editorial author begins by referring provisions of closure of LLP in short then
further continue with some important FAQ’s in relation to Closure / Strike off
of LLP. The main thrust of the article, however, is upon the LLP [1]Notification
dated: 16th May, 2017 with reference to LLP (Amendment) Rules, 2017.
This is article no. 407 of the series of editorials
written by the author on corporate laws {including Companies Act, 2013, SEBI,
RBI Regulations, IBC, LLP Act, 2008 etc.}.
Situation: 1
Regular e-forms Requirements &
Other Requirements:
|
S. No.
|
Agenda
|
Particulars
|
e-forms
|
Due Date Form
Filling
|
|
STATEMENT OF
ACCOUNT & SOLVENCY
|
A “Statement of
Accounts and Solvency” in prescribed form shall be filed by every LLP with
the Registrar every year. sub-section (3) of section 34
|
LLP-8
|
30th
October
|
|
|
ANNUAL RETURN
|
Every LLP would
be required to file annual return in Form 11 with ROC within 60 days of
closer of financial year.
|
LLP-11
|
30 May
|
A. Whether LLP have to complete
Annual Fillings with ROC (E form LLP-8 and LLP-11) before filling application
for Strike off of LLP.
Statutory Provisions Contained Under the Act:
Provisions of Strike off
of LLP are given in clause (b) of sub rule 1 of Rule 37 of LLP Rules 2008. As
per rules, there is no provisiosn for exemption from the filing of e-form LLP-
8/ 11 for strike off of LLP. Therefore, every LLP have to complete annual
filing before strike off of LLP.
However, by LLP
Amendment Rules, 2017 situation has been changed. Extract of the Amendment
Rules “The limited liability partnership referred to in clause (b) of
sub-rule (1) of rule 37 shall, file overdue returns in Form 8 and Form 11 up to
the end of the financial year in which the limited liability partnership [2]ceased to carry on its business or commercial
operations before filing of form for strike off”.
Interpretation Note:
As per the language of
amendment rules LLP shall file overdue returns in Form 8 and Form 11 “up to
the end of the financial year” in which LLP “ceased to carry on its
business or commercial operation”.
Hence, considering the
provisions of amendment rules one can opine that if a non operational LLP [3]desires
to strike off it must complete the filing of Form 8 and Form 11(Here after
referred as “Annual Filing”)up to the end of the financial year in which the
limited liability partnership ceased to carry on its business or commercial
operations.
Like: If a LLP Incorporated on 10th
April, 2010. It ceases / stops to carry on its business from 20th
February, 2013 (F.Y. 2012-13).
Situations: (i) LLP has completed
filing of e-forms LLP - 8 / 11till 31.03.2017.(ii) LLP has filed e-forms LLP -
8 / 11for end of financial year 31st March, 2013. (iii) LLP has not
filed e-forms LLP - 8 / 11since incorporation.
Situation Analysis:
(i) If LLP has completed
Annual filing till the date of strike off, then no question arise in respect of
completion of Annual Filing. LLP can go for strike off as per rule 37.
(ii) In this situation,
LLP has filed annual filing form till the financial year ended 31.03.2013 (the
last financial year in which LLP was operational). From 1st April,
2013 LLP has not done any business or not carried any business.
Therefore, as per
amendment rule, 2017 LLP can file application for strike off of LLP with ROC
without completion of annual filing forms since financial year 2013-14.
(iii) In this situation,
LLP has not filed annual form since incorporation. However, if LLP wants to
apply for strike off under rule 37 then as per amendment rules it has to
complete annual filing till the financial year 2012-13. [Late fee for
completion of annual filing form is INR 100 per day till the date of filing of
form].
Check Points:
I. LLP should not be
carrying any business or should be non operational at least for a period of one
year.
II. Check – Whether LLP has
filed annual forms till the date when it ceased to carry on its business or
commercial operations.
B. Whether Company have to filed
Initial LLP Agreement and any amendment in LLP Agreement (E form LLP-3) with
ROC before filling application for Strike off of LLP.
Statutory Provisions Contained Under the Act:
LLP rules don’t provide
any exemption from the filing of LLP agreement in e-form LLP 3 with ROC.
Therefore, before filing of application for strike off it has to file LLP
Agreement with ROC.
However, by LLP
Amendment Rules, 2017 situation has been changed. Extract of the Amendment
Rules “LLP file e-form 24 enclosed with copy of the initial limited
liability partnership agreement, if entered into and not filed, along with
changes thereof in cases where the Limited Liability Partnership has not
commenced business or commercial operations since its incorporation.”
Interpretation Note:
As per the language of
amendment rules LLP shall enclose copy of initial LLP Agreement “if entered
into and not filed” “along with any change in agreement” “in cases where the
Limited Liability Partnership has not commenced business or commercial
operations since its incorporation
Hence, considering the
provisions of amendment rules one can opine that if a LLP is non-operational
since incorporation, it can file application for strike off without filing of e
form LLP-3 with ROC.
Situations: (i) If a LLP Incorporated on 1st
April, 2011. It ceases / stops to carry on its business from 10th
January, 2014 (F.Y. 2013-14). It has not filed LLP-3 with initial LLP
Agreement. Whether it can apply for strike off without filing of LLP-3?
Situations: (ii) If a LLP
Incorporated on 1st April, 2011 and has not commence business since
incorporation. It has not filed LLP-3 with initial LLP Agreement. Whether it
can apply for strike off?
Situations: (iii) If a LLP
Incorporated on 1st April, 2011. It ceases / stops to carry on its
business from 10th January, 2014 (F.Y. 2013-14). It has entered into
amendment LLP agreement and not filed LLP-3 with such amendment Agreement.
Whether it can apply for strike off without filing of LLP-3?
Situation Analysis:
(i) In this case the LLP has commenced business and forget to file
the Initial LLP Agreement then as per amendment rule if the desires to apply
for strike off its have to file LLP-3 with initial LLP Agreement.
(ii) In this case LLP has not commenced business or
operation since incorporation and not filed initial LLP Agreement and any
amendment in LLP Agreement.
Therefore, as per
amendment rule, 2017 LLP can file application for strike off of LLP with ROC
without completion of filing of forms LLP – 3.
(iii)In
this Case LLP has commenced business, file the initial LLP Agreement with ROC
but fails to file the amendment in the initial LLP Agreement.However, if LLP
wants to apply for strike off under rule 37 then as per amendment rules it has
to file Amendment in initial LLP Agreement in LLP-3 with ROC. [Late fee for
filing form is INR 100 per day till the date of filing of form].
Check Points:
I.
Check – Whether LLP has
filed Initial LLP Agreement.
II.
Check – Whether LLP has
filed Amendment in initial LLP Agreement, if any.
III.
If LLP not file any of
above two agreements then Check – Whether LLP commenced any business or
operation since incorporation.
Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES
Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com). Disclaimer:
The
entire contents of this document have been prepared on the basis of relevant
provisions and as per the information existing at the time of the preparation.
Although care has been taken to ensure the accuracy, completeness and
reliability of the information provided, I assume no responsibility therefore.
Users of this information are expected to refer to the relevant existing
provisions of applicable Laws. The user of the information agrees that the
information is not a professional advice and is subject to change without
notice. I assume no responsibility for the consequences of use of such
information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT,
SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION
WITH THE USE OF THE INFORMATION
[2]The
date of cessation of commercial operation is the date from which the Limited
Liability Partnership ceased to carry on its revenue generating business and
the transactions such as receipt of money from debtors or payment of money to
creditors, subsequent to such cessation will not form part of revenue
generating business
[3]
As per Rule 37 of LLP Rules if a LLP wants to strike
off it should not carrying on any business
operations for the period of one year or
more.
Nice post
ReplyDeletexyz
What are the due dates for Annual Compliance for LLP under the CoVID-19 outbreak?
ReplyDelete