Winding Up of LLP

What is the winding up of an LLP?

LLPs are newly formed business entities that were introduced in India in 2018 through the LLP Act. Limited Liabilities enjoy audit exemption if the annual turnover of the LLP is less than Rs 40 lakh or the capital contribution is less than Rs 25 lakh.

A limited Liability Partnership is a basic partnership in which all the partners share limited liabilities as the LLP is set up under certain legal conditions and documentation. There is a specific process as to how an individual can register his LLP. As there are advantages to registering as LLP in India, there are also some disadvantages. Many of them are also unsure about the process of winding up an LLP. Here, we are going to take a look at how to close an LLP in India.

Sections 63, 64, and 65 of the LLP Act, 2008 govern the process of winding up an LLP. The winding-up of a Limited Liability Partnership can be initiated voluntarily or by a Tribunal. Let us look at both in detail.

Winding up of an LLP by the tribunal

The winding-up of LLP is initiated by a Tribunal for the following reasons:

• LLP wants to close.
• LLP has less than two partners for more than 6 months
• LLP is not in a position to repay the loan
• The LLP has acted against the interests of the sovereignty and integrity of India, the specified security of the State or public order.
• The LLP has not filed the statement of accounts and solvency or the LLP annual return for five consecutive financial years with the Registrar.
• The Tribunal considers that it is just and just that the LLP should be wound up.