Closing LLP

Winding up is the process, where all the assets of the business are sold to paying off creditors and distributing surplus if any, among the owners of the business. An LLP may decide to wind up its business by two modes, either by voluntarily winding up or compulsory winding up.

In voluntary winding up partners may decide between themselves to wind up the operations of the business.

In compulsory winding up an LLP may be compulsorily wound up by the order of the tribunal. There are certain circumstances for the LLP compulsory winding up. Eg. when LLP is unable to pay off its debts, where the number of partners of the limited liability partnership is reduced below two and it continues for the period of more than six months.

REASONS FOR WINDING UP BY TRIBUNAL

• LLP wants to be wind up
• There are less than two partners in LLP for a period of more than 6 months
• LLP is not in position to pay its debts
• LLP has not filed with the registrar, the statement of Accounts and solvency or annual returns of LLP for any 5 consecutive financial years.
• The Tribunal is of the option that it is just and equitable that the LLP should be wound up.

Closing Private Limited

If your business in the private limited company is not running properly or faces continuous losses, it is better to close such private limited company and look for a new beginning.

A private limited company needs to be closed or windup when there are no exchanges or the Directors of company are not willing to proceed its operations. A private limited company generally can be shut by both voluntary and compulsory circumstances.

REASONS LEADING TO CLOSURE OF COMPANY

Key Requirements

• Pass an ordinary resolution in Board of Directors meeting.
• There should be no business activity from the day when resolution is passed
• Declaration by members stating there is no debt pending on company and the required forms are filed

MINIMUM REQUIREMENTS FOR CLOSING PRIVATE LIMITED COMPANIES

• Atleast one year old from date of Incorporation.
• There is no business Activity for one year
• File a statement of Account annexed at Annexure C

REASONS LEADING TO CLOSURE OF COMPANY

• Directors’ willingness
• By Court order
• Default in holding statutory gathering or consistence with statute
• If members go underneath recommended number
• Company gets bankrupt
• Financial accounts are not submitted for 5 years