Introduction
LLP Form 24 : Limited Liability Partnerships (LLPs) are a preferred business structure in India due to their flexibility, limited liability benefits, and lower compliance requirements. However, in some cases, LLPs may need to close their operations permanently. To do so, they must follow a legal process prescribed by the Ministry of Corporate Affairs (MCA), which includes filing LLP Form 24 for the closure of the LLP.
Definition: What is LLP Form 24?
LLP Form 24 is a statutory form prescribed by the MCA that allows LLPs to apply for voluntary closure or strike-off under the Limited Liability Partnership Act, 2008.
Key Features of LLP Form 24:
- Used for closing an LLP that is inactive or has no liabilities.
- Allows an LLP to apply for strike-off from the MCA’s register.
- Ensures the legal winding-up process is compliant and transparent.
- Requires partners’ approval, financial statements, and other documents.
- Reduces the compliance burden by legally dissolving the LLP.
Application: When is LLP Form 24 Required?
Who Should File LLP Form 24?
An LLP must file Form 24 if it meets the following criteria:
- Has not conducted business for at least one year OR never commenced business.
- Has no pending debts, liabilities, or creditors.
- All partners agree to the closure.
- The LLP bank account (if any) has been closed.
Documents Required for LLP Form 24 Filing
- Consent letters from partners approving the closure.
- Indemnity Bond signed by all partners.
- Statement of assets and liabilities (not older than 30 days before filing).
- Affidavit from partners declaring that the LLP has no liabilities.
- Bank closure certificate if an LLP bank account was opened.
- Income Tax Return (ITR) acknowledgment if filed.
Deadline for Filing LLP Form 24
- There is no specific deadline, but LLPs must ensure compliance before submission.
Benefits of Filing LLP Form 24
1. Legal Closure of LLP
- Ensures the LLP is legally closed and removed from government records.
2. Avoids Non-Compliance Penalties
- If an LLP is inactive but not closed properly, it continues to incur penalties for non-compliance.
3. Saves Compliance Costs
- No need to file annual returns, financial statements, or pay government fees after closure.
4. Protects Partners from Legal Liabilities
- Legally closing an LLP ensures partners are not held accountable for future obligations.
5. Simplifies Business Exit Strategy
- Helps entrepreneurs exit the LLP structure easily and focus on new ventures.
Limitations of LLP Form 24
1. Cannot Be Filed If Liabilities Exist
- LLP Form 24 is only applicable to LLPs without pending debts.
2. Requires Several Legal Documents
- Partners must arrange for affidavits, indemnity bonds, and financial statements before filing.
3. Time-Consuming Process
- The ROC takes time to verify documents and approve dissolution, causing delays.
4. Cannot Be Revoked After Approval
- Once the LLP is struck off, it cannot be revived unless restored through a legal process.
Process of Filing LLP Form 24
Step-by-Step Procedure
Step 1: Pass a Resolution for Closure
- Conduct a meeting with all partners and pass a resolution approving the closure.
Step 2: Prepare Necessary Documents
- Arrange for affidavits, indemnity bonds, financial statements, and ITR acknowledgment.
Step 3: Close LLP’s Bank Account
- If the LLP has a bank account, it must be closed before applying for dissolution.
Step 4: Fill in LLP Form 24 Details
- Provide details about the LLP, partners, reason for closure, and supporting documents.
Step 5: Digital Signature of Designated Partner
- One of the designated partners must digitally sign the form before submission.
Step 6: Submit the Form and Pay Fees
- File the form online through the MCA portal (www.mca.gov.in) and pay applicable fees.
Step 7: Approval from ROC
- The Registrar of Companies (ROC) reviews and approves the closure application.
Comparative Table: LLP Form 24 vs. LLP Form 17
| Feature | LLP Form 24 | LLP Form 17 |
|---|---|---|
| Purpose | Voluntary closure of LLP | Conversion of LLP to Private Company |
| Filing Deadline | No specific deadline | Within 30 days of conversion decision |
| Required Documents | Affidavit, indemnity bond, bank closure proof | LLP agreement, approval documents |
| Approval Authority | ROC | ROC |
| Penalty for Late Filing | None | ₹100 per day |
Conclusion
Filing LLP Form 24 is a crucial step in legally closing an LLP. It ensures that the LLP is struck off from government records, prevents compliance penalties, and simplifies the exit process for business owners.
For LLPs that have ceased operations, timely filing of Form 24 helps avoid unnecessary compliance costs. Entrepreneurs planning to shut down their LLP should consult legal experts like Company Secretaries (CS) or Chartered Accountants (CA) for smooth processing.
FAQs on LLP Form 24
1. Can LLP Form 24 be filed if the LLP has outstanding loans?
No, LLP Form 24 can only be filed if all liabilities and debts are cleared.
2. What is the penalty for not closing an inactive LLP?
An inactive LLP that does not file annual compliance reports is subject to a penalty of ₹100 per day.
3. How long does the LLP Form 24 approval process take?
The Registrar of Companies (ROC) takes 30-90 days to process and approve LLP Form 24.
4. Can an LLP be revived after filing Form 24?
Once an LLP is struck off, it can only be revived by applying to the National Company Law Tribunal (NCLT).
5. Can LLP Form 24 be filed online?
Yes, it must be filed through the MCA portal (www.mca.gov.in).
6. Is it mandatory for all partners to agree to file LLP Form 24?
Yes, all partners must unanimously agree before applying for LLP closure.
7. Do LLPs need to file income tax returns before closure?
Yes, LLPs must ensure that all pending income tax returns are filed before submitting Form 24.
Understanding LLP Form 24 helps business owners legally close an LLP, avoid penalties, and focus on new opportunities.
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