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Closure of a Limited Liability Partnership
As LLP may be a separate legal entity, it’s created by following a proceeding hence when it involves its closure there’s a correct legal procedure to be followed.
An LLP could also be closed through winding-up or by striking off its name from Register of LLP. The winding-up could also be a costly or time-consuming affair for several LLPs because it includes approval from Tribunals and the involvement of Liquidators. Therefore, the LLP that has been non-operative since its formation or for quite a year, may proceed the straightforward way of exit i.e. Strike-off. The LLP is going to be declared struck-off after the publication of notice by Ministry. Once it’s struck-off, the LLP ceases to be alive in eyes of law.
Reasons for dissolution of LLP in India
- To avoid compliance and filing responsibilities for the LLP’s which aren’t active.- The statutory compliances of maintaining an LLP are above the value of completing. If the LLP is dormant it’s better to finish up than fulfill the compliances.
- To avoid fines and penalty for late filing, it’s better to officially finish up LLP’s which are inactive.- All LLPs registered in India need to file the annual returns and statement of accounts for every fiscal year regardless of annual revenue or profit disregard of its working. LLP that hasn’t opened a checking account or commenced commercial activity would need to file the subsequent filings annually to take care of LLP compliance and avoid penalty.
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