(A) Declaring the LLP as Defunct
In case the LLP wants to close down its business or where it is not carrying on any business operations for the period of one year or more, it can make an application to the Registrar for declaring the LLP as defunct and removing the name of the LLP from its register of LLP’s.
(B) Winding up of LLP
Section 63, 64 and 65 of LLP Act 2008 governs the process for winding up of the LLP. It is the process where all the assets of the business are disposed off to meet the liabilities of the same and surplus any, is distributed among the owners. The LLP Act 2008 provides for following two modes for winding up the LLP i.e.:
- Voluntary winding up
- Compulsory winding up
Voluntary Winding up : Under this, the partners may between themselves decide to stop and wound up the operations of the LLP.
Compulsory Winding up : A limited liability partnership may be compulsorily wound up by the Tribunal,—
- If the limited liability partnership decides that limited liability partnership be wound up by the Tribunal;
- If, for a period of more than six months, the number of partners of the limited liability partnership is reduced below two;
- If the limited liability partnership is unable to pay its debts;
- If the limited liability partnership has acted against the interests of the sovereignty and integrity of India, the security of the State or public order;
- If the limited liability partnership has made a default in filing with the Registrar the Statement of Account and Solvency or annual return for any five consecutive financial years; or
- If the Tribunal is of the opinion that it is just and equitable that the limited liability partnership be wound up.