Closing a dormant LLP: striking off with Form 24 and clearing your pending Form 8 and Form 11

You run an LLP that has stopped trading. No sales, no purchases, no new work. The partners have moved on. The question is how to close it properly instead of just ignoring it.

Ignoring it does not work. An idle LLP still owes an annual return and a Statement of Account and Solvency every year, and late fees keep running.

This article covers the compliance route to closing a dormant LLP: striking its name off the register using LLP Form 24. It focuses on what an officer or designated partner must clear first, and the order in which to do it.

The law in one paragraph

Section 75 of the Limited Liability Partnership Act, 2008 lets the Registrar strike a defunct LLP off the register. The test is that the Registrar has reasonable cause to believe the LLP is "not carrying on business or its operation". The name is struck off "in such manner as may be prescribed". Before doing so, the Registrar must give the LLP "a reasonable opportunity of being heard" (proviso, s.75, LLP Act 2008).

The manner is prescribed in rule 37 of the Limited Liability Partnership Rules, 2009. Rule 37 is headed "Striking off name of defunct LLP". It was later amended, and the forms were replaced by the Limited Liability Partnership (Second Amendment) Rules, 2022, notified on 4 March 2022 as G.S.R. 173(E). Those rules came into force on the date of publication in the Official Gazette. They replaced the forms, including Form 24.

Two ways an LLP gets struck off

Rule 37(1), LLP Rules 2009, opens two doors. First, the Registrar acts on his own where the LLP has carried on no business for two years or more and he has reasonable cause to believe so (rule 37(1)(a)). Second, the LLP applies in Form 24 with the consent of all partners after one year or more of no business (rule 37(1)(b)).

If you want control over timing and outcome, the second route is the one you use. You do not wait for a notice. You clear your record and apply.

All partners must consent (rule 37(1)(b)). A regulated LLP must also attach its regulator's approval (second proviso, rule 37(1)); the Form 24 asks for the date of that approval.

Where you stand today: three questions to answer first

Before you open the form, answer these.

Has the LLP really stopped for a year or more? Form 24 asks for the date the LLP ceased business (item 6). The ICSI's FAQs on LLPs (guidance, not the rule text) explain this date as the one from which revenue-generating business stopped, and say later receipts from debtors or payments to creditors do not count as business.

Are all income-tax returns up to date? Item 5 of Form 24 asks "Whether up to date Income-tax returns filed" with a Yes or No. A copy of the acknowledgement of the latest income-tax return is a mandatory attachment (Form 24 attachment (b)). Tax returns are a separate compliance track from the MCA one. Sort them before you start.

Does the LLP have any assets or liabilities? The route in Form 24 is for an LLP with nil assets and nil liabilities. The form asks for a statement of accounts "disclosing Nil Assets and Nil Liabilities" (item 10, LLP Form 24). If the LLP still holds a bank balance, owes a vendor, or has a loan, deal with those first. Close the bank account, pay off the dues, settle the loan, and only then apply.

Clear the pending Form 8 and Form 11 first

This is the step that trips most dormant LLPs. A strike-off application is not a way to avoid past filings. Form 24 lists both "Form 8_Statement of Account Solvency and Charges" and "Form 11_Annual Return of LLP" as attachments, and both are marked mandatory. The ICSI's FAQs on LLPs (guidance, not the rule text) add that the LLP should file overdue Form 8 and Form 11 up to the end of the financial year in which it ceased business, before filing Form 24. Rule 37 has a sub-rule (1A) that Form 24 itself refers to, but its text is not reproduced here; read it on the MCA portal.

Here is what the two forms are.

Form 11 is the annual return. Section 35(1) of the LLP Act, 2008 says every LLP must file it "within sixty days of closure of its financial year". The LLP Rules 2009 name the form as Form 11.

Form 8 is the Statement of Account and Solvency. Section 34(2) of the LLP Act, 2008 requires the LLP to prepare it within six months from the end of each financial year, signed by the designated partners. Section 34(3) requires it to be filed "within the prescribed time". Check the Form 8 due date on the MCA portal for the year you are filing. This article does not give a day count for it.

What if you are already late? Section 35(2) of the LLP Act, 2008 fixes a penalty of ₹100 for each day the annual return is late, capped at one lakh rupees for the LLP and fifty thousand rupees for designated partners. The LLP Rules 2009 (additional-fee table, as substituted in February 2022) also multiply the filing fee as delay grows. Read that table for your year before you budget.

Also remember that Form 24 is not a substitute for Form 8 and Form 11: the form asks for both as attachments. Clear them first.

What goes with Form 24

The 2022 Form 24 lists these attachments: the partners' signed authority, the latest income-tax acknowledgement, Form 8, Form 11, the regulator's order or NOC if the LLP is regulated, and the designated partners' affidavit.

The ICSI's FAQs (guidance, not the rule text) describe what the statement and the affidavit should contain. Confirm against the current form and instruction kit.

• Statement of accounts: showing nil assets and nil liabilities, "certified by a Chartered Accountant in practice", made up to a date not earlier than thirty days before the date of filing Form 24.
• Affidavit by designated partners, saying: when the LLP ceased business (or that it never began); that it has no liabilities and the partners indemnify any liability that may arise after striking off; and that any bank account has been closed, with the bank's certificate or statement showing closure. It also covers the case where no income-tax return was filed because the LLP never traded.
• If the LLP never began business, a copy of the original LLP agreement (with any changes), if it was not filed earlier.

The form's item 10 is the statement-of-account block, and for a true nil-asset LLP every line should be zero. The form is digitally signed with a membership or certificate-of-practice number, which fits the CA certification the ICSI describes.

Form 24 also asks whether any prosecution is pending against the LLP or any of its partners or designated partners (item 8), with the Act, the court and the case number. Be careful here. If something is pending, the answer must say so.

The fee

The fee for striking off the name of a defunct LLP under rule 37 is in Annexure A to the LLP Rules 2009, as substituted by the February 2022 amendment (G.S.R. 109(E)). The table says ₹500 for small LLPs and ₹1,000 for other LLPs (item 5(1)(c), Annexure A). Check the current figure on the MCA portal before you pay, because it is a portal payment tied to your LLP's category.

Step by step

• Confirm the stop date and close bank accounts, dues and contracts. The target is nil assets and nil liabilities.
• File all overdue Form 11 and Form 8 up to the end of the financial year in which business stopped (both are mandatory Form 24 attachments; ICSI guidance on the cut-off). Pay the additional fees.
• File income-tax returns and keep the acknowledgement.
• Get every partner's signed authority (rule 37(1)(b)).
• Get a Chartered Accountant in practice to certify the nil statement, dated within thirty days before you file (ICSI guidance).
• Prepare the designated partners' affidavit.
• File Form 24 on the MCA portal with all attachments and pay the fee.
• Watch for notices. The application is placed on the MCA website for one month (rule 37(2)).
• Order and Gazette. After the one-month period, unless cause to the contrary is shown, the Registrar may by order strike the name off and publish notice in the Official Gazette. "On the publication in the Official Gazette of this notice, the limited liability partnership shall stand dissolved" (rule 37(3)).

What the Registrar checks, and what survives

Before passing the order, rule 37(4) requires the Registrar, where there is reason to believe the LLP has any asset or liability, to be satisfied that enough provision has been made to collect all dues and discharge all liabilities. He may take undertakings from the designated partners. The proviso adds that, despite those undertakings, the LLP's assets stay available to pay liabilities even after the date of the order.

Striking off does not end the designated partners' exposure. Rule 37(5) says the liability of every designated partner "shall continue and may be enforced as if the limited liability partnership had not been dissolved." The Form 24 verification repeats both points, and the form asks the designated partner to confirm them.

Rule 37(6) also says the Tribunal's power to wind up an LLP whose name has been struck off is not affected.

What not to do

• Do not skip the overdue Form 8 and Form 11. Form 24 requires both as attachments, and ICSI guidance says to file them before applying.
• Do not say "nil" when it is not. Section 37 of the LLP Act, 2008 punishes a false statement or a knowing omission of a material fact in a return, statement or other document. The penalty is imprisonment up to two years and a fine of not less than one lakh rupees and up to five lakh rupees. The Form 24 verification refers to this section.
• Do not leave a bank account open. The affidavit speaks to it.
• Do not apply without every partner's consent. The rule needs all partners (rule 37(1)(b)).
• Do not use this route if the LLP has real assets and debts. Winding up under section 63 of the LLP Act, 2008 is a separate path.

What to do now

• Next step: Write down the date the LLP stopped trading, and list every Form 8 and Form 11 not yet filed up to the end of that financial year (Form 24 attachments; ICSI guidance on the cut-off).
• Deadline: Form 11 is due within sixty days of the close of each financial year (s.35(1), LLP Act 2008). Form 8 must be prepared within six months of year-end and filed within the prescribed time (s.34(2) and (3), LLP Act 2008). Check the Form 8 due date on the MCA portal.
• Consequence of delay: ₹100 a day on a late annual return, capped at one lakh rupees for the LLP and fifty thousand rupees for designated partners (s.35(2), LLP Act 2008), plus the additional fees in the LLP Rules 2009.

Have a CA review your facts before you act or file.

FAQs

How long must an LLP be dormant before it can apply?
One year or more with no business or operation for an LLP's own application (rule 37(1)(b), LLP Rules 2009). Two years or more applies where the Registrar acts on his own (rule 37(1)(a)).

Do I need a Chartered Accountant?
Yes, in practice. The ICSI's FAQs on LLPs (guidance, not the rule text) say the nil assets and nil liabilities statement is "certified by a Chartered Accountant in practice", and Form 24 carries a membership or certificate-of-practice number field for the signatory.

Does the LLP stand dissolved as soon as I file Form 24?
No. Filing starts the process. The LLP stands dissolved only on publication in the Official Gazette of the Registrar's notice of striking off (rule 37(3)).

What if I do not file Form 8 and Form 11 for the dormant years?
Penalties and additional fees keep growing (s.35(2), LLP Act 2008), and Form 24 itself requires both forms as attachments. ICSI guidance says to file them before applying.

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See Also

• LLP Annual Compliance: Form 8, Form 11, and the Audit Threshold
• Our company bank account is frozen and there is a ROC or KYC problem behind it. Where do we start?
• We changed our LLP agreement. Do we have to file Form 3 within 30 days?