Closure of Company & LLP

Closure Of Company

Strike Off of a Company is a process of closure of a Company by removing its name from the Register of companies, which is maintained by the Registrar of Companies (ROC). Once the Company is struck off, it loses its existence and shall not be eligible to carry out further business operations.

A registered Company may face difficulties to carry out its business operation due to adverse business conditions or lack of finance. Due to such business conditions, the shareholders/directors may lose interest and intention to carry out further business activities.

The government has given an option for voluntary closure of the Company, using which a company may apply to strike off or remove its name from the register, which is maintained by the ROC.

Closure of LLP

An LLP is a partnership that is formed and incorporated under the Limited Liability Partnership Act 2008. It is a legal entity where each partner’s liability is limited to the amount that they put into the business.

Closure of LLP means striking off its name from the register. When an LLP becomes defunct i.e., non-operating then the registrar, after following the prescribed procedure, closes the LLP. An LLP is called defunct when it has no business operation for one year or more. An LLP can also be closed if it has not commenced its business within one year of its incorporation. Closure of LLP is similar to winding up. This means that before striking off the name of LLP all the partners are required to settle all the assets and liabilities of the LLP.

Section 75 of the LLP Act 2008 provides that where the registrar has reasonable cause to believe that an LLP is not carrying on business or operation, in accordance with the provisions of this act, the name of such LLP may be struck off the registrar of limited liability partnerships in such manner as may be prescribed. Rule 37 of the LLP Rules, 2009 provides the manner of closure of an LLP.