LLP Form 24: Filing for Closing an Limited Liability Partnership

Closing a business is never easy whether things didn't go as planned or the partners simply decided to move on. Wrapping up a Limited Liability Partnership (LLP) in India is a process that demands both careful planning and precise legal compliance. Partners who ignore it, later look at heavy penalties, frozen assets, and potential disqualification as a designated partner.

Now, the question arises “What Should I Do?” The answer, in most cases, starts with LLP Form-24. In this guide, we will break down everything you need to know about Form 24: what it is, when to use it, how to file it, and many more. 

What Is LLP Form 24?

LLP Form 24 is an application filed with the Ministry of Corporate Affairs (MCA) under Rule 37(1) of the LLP Rules, 2009. It is used to request the striking off of an LLP's name from the Register of LLPs. It is the official way of closing an inactive LLP without going through a full-blown winding-up process.

LLP Form 24 is one of the simpler, faster alternatives to a formal dissolution process. Instead of appointing a liquidator and going through months of court-supervised proceedings, Form 24 allows partners of a dormant or never-operational LLP to exit cleanly and quickly. However it is important provided they meet the eligibility conditions.

The form is filed with the Registrar of Companies (RoC), who, after verifying the application, publishes a public notice and then removes the LLP from the official register if no objections are raised.

When Can You File LLP Form 24?

Not every LLP qualifies for the striking-off route. The MCA has set specific conditions that must be met before you're eligible to file Form 24:

• The LLP has never commenced business, or
• The LLP ceased all commercial operations at least one year prior to the application date.
• The LLP has no outstanding liabilities, this means zero pending debts, dues, or creditor claims.
• All bank accounts must be closed, with a bank closure letter as proof.
• All pending annual filings (Form 8 and Form 11) must be brought up to date, if applicable.
• The LLP Agreement must have been filed with the RoC at the time of registration (if applicable).

If your LLP is still operational, has active bank accounts, or owes money to anyone, Form 24 is not the right path. In that case, you'll need to look at Voluntary Winding Up, a more elaborate process that involves appointing a liquidator and formally settling all dues before dissolution.

LLP Closure: Two Methods at a Glance

Before diving into Form 24 specifically, it helps to understand how it fits within the broader framework of LLP closure in India. There are two primary routes:

1. Voluntary Winding Up: This is the formal route, chosen when the LLP has active business operations, outstanding liabilities, or assets that need to be liquidated. Partners collectively pass a resolution, appoint a liquidator, sell off assets, settle creditors, and file with the RoC. The process typically takes 4 to 6 months and involves multiple legal filings. It's more comprehensive, but also more time-consuming and expensive.
2. Striking Off (via Form 24): This is the simplified route, ideal for LLPs that are dormant or were never fully operational. It skips the liquidator requirement and can be completed in 3 to 4 months, provided all filings are in order and there are no liabilities. This is where Form 24 comes in.

The key difference? Striking off is for clean-slate closures. Voluntary winding up is for LLPs with unfinished business.

Step-by-Step Process to File LLP Form 24

Here's a detailed, practical walkthrough of the Form 24 filing process:

Step 1: Cease All Business Operations: To start this process, LLPs must either have never commenced any business activity or must have formally stopped all commercial operations. Note the date on which operations ceased, you will need to reference this in your affidavits and filings later. Without a clear cessation date, the application may be rejected. 

Step 2: Settle All Liabilities and Close Bank Accounts: Every outstanding liability must be fully cleared including vendor dues, employee salaries, loan repayments, tax dues, etc. Once liabilities are settled, close all bank accounts associated with the LLP and obtain a bank closure certificate/letter from your bank. This document is a mandatory attachment when filing Form 24.

Step 3: Clear All Pending Statutory Filings: If your LLP has been operational even for a short time, you are likely required to have filed Form 8 (Statement of Accounts & Solvency) and Form 11 (Annual Return) for each financial year. All pending filings must be submitted and brought up to date before you can apply for striking off. Even if the LLP was dormant, skipping these filings will reject your application.

Step 4: Prepare Affidavits from All Designated Partners: Each designated partner must execute a affidavit clearly stating:

• The LLP has ceased operations (mentioning the specific date), or has never commenced business.
• The LLP has no pending liabilities, financial obligations, or legal proceedings.
• The partners agree to indemnify any future claims that may arise against the LLP after its name is struck off.

These affidavits must be notarised and attached to the Form 24 application.

Step 5: Prepare a Nil Statement of Accounts: A statement of account confirming that the LLP has nil assets and nil liabilities must be prepared and certified by a practising Chartered Accountant (CA). Critically, this statement must be dated no more than 30 days before the date of filing. An undated statement will lead to rejection.

Step 6: Attach the Latest Income Tax Return (If Applicable): If the LLP has ever filed an Income Tax Return, a copy of the most recent ITR must be included as a supporting document. If the LLP never commenced business and no ITR was ever filed, this requirement may not apply but it's advisable to consult a CA or legal professional to confirm this for your specific situation.

Step 7: File LLP Form 24 on the MCA Portal: Once all documents are in order, log into the MCA portal and submit Form 24 along with all required attachments. The form must be digitally signed by the designated partners using their Digital Signature Certificates (DSCs).

After submission, the RoC will review the application. If satisfied, they will issue a public notice on the MCA website inviting objections. If no valid objections are received within the stipulated timeframe, the RoC will formally strike off the LLP's name from the register and issue a Certificate of Striking Off.

Documents Required for LLP Form 24 Filing

Having your paperwork ready before you initiating the process saves time and prevents unnecessary delays. Here's a comprehensive checklist for your reference:

Common Mistakes to Avoid

Many LLP closure applications get delayed or rejected because of avoidable errors. Here are the most common ones:

1. Filing Form 24 without clearing pending annual returns: The RoC will simply reject the application if Form 8 or Form 11 filings are overdue. Clear these due first, even if it means paying late filing fees.
2. Submitting a statement of accounts older than 30 days: The nil balance sheet must be fresh. Don't prepare it weeks in advance and then delay the filing.
3. Not informing all designated partners: All partners must be in agreement, and all must sign the affidavits. Partial signatures are not accepted.
4. Leaving the bank account open: Even a dormant bank account with zero balance can be a disqualifier. Close it and obtain formal documentation from the bank.
5. Ignoring tax dues: Outstanding income tax, GST, or TDS dues will block the striking-off process. Ensure a clean tax record before applying.

What Happens After the LLP is Struck Off?

Once the RoC issues the Certificate of Striking Off, the LLP ceases to exist as a legal entity. The name has been removed from the official register and partners are no longer bound by LLP obligations. The entity can no longer enter into contracts, own property, or incur liabilities.

However, it's important to note that striking off does not absolve partners from past liabilities. If creditors surface after the LLP has been struck off, the designated partners may still be personally held accountable based on the indemnity they provided during the process.

Can a Struck-Off LLP Be Restored?

Yes, a struck off LLP can be restored but with certain conditions. If an LLP has been wrongly struck off, or if business circumstances change, it is possible to file for restoration before the National Company Law Tribunal (NCLT) within three years of the striking-off date. The LLP will need to provide valid grounds, settle all pending filings, and pay outstanding fees. The NCLT, if satisfied, will order the RoC to restore the LLP to the register.

Consequences of Non-Compliance

Many LLP partners make the mistake of simply "abandoning" an LLP, stopping operations, ceasing filings, and hoping the authorities won't notice. This approach has serious consequences and they are:

• Accumulation of penalties on overdue Form 8 and Form 11 filings. These can run into lakhs of rupees over time.
• Blacklisting of designated partners, which can prevent them from being appointed as directors or partners in future companies.
• Legal liability if creditors or tax authorities pursue the LLP for dues.
• Compulsory striking off by the RoC under Section 75 of the LLP Act, which is far less clean than a voluntary process and can leave a permanent compliance black mark.

The message is clear: if your LLP is no longer active, close it properly and on time.

Key Takeaways

Closing an LLP through Form 24 is a well-defined, manageable process but it requires attention to detail. Here's a quick summary of what you need to remember:

• Form 24 is for dormant or never-operational LLPs with no outstanding liabilities.
• All statutory filings (Form 8, Form 11) must be current before applying.
• The nil statement of accounts must be CA-certified and dated within 30 days of filing.
• All designated partners must execute notarised affidavits.
• Bank accounts must be formally closed before submission.
• The process typically takes 3 to 4 months from filing to final striking off.
• Non-compliance leads to heavy penalties and potential disqualification.

Conclusion

Closing an LLP is a significant decision, but handling the closure correctly is equally important. Filing LLP Form 24 is the most practical route for most inactive LLPs. It's faster, less expensive, and far less disruptive than a full winding-up procedure. But it demands precision in documentation, timeliness in compliance, and full alignment among all designated partners.

If you're unsure whether your LLP qualifies for striking off or need help navigating the MCA portal and document requirements, it's always worth engaging a qualified Chartered Accountant or Company Secretary. The cost of professional guidance is a small price to pay compared to the penalties and legal headaches that come with getting this wrong.

Closing one chapter properly is often the cleanest way to open the next one.