Eligibility Criteria for LLP and OPC Closure in India

An LLP can be closed voluntarily if it has not commenced business within one year of incorporation, or if it has ceased operations and has no assets or liabilities. The primary route for closure is through an application to the Registrar of Companies (ROC) under the Limited Liability Partnership Act, 2008 and the LLP (Winding up and Dissolution) Rules, 2012.

For a strike-off application, the LLP must have no outstanding liabilities, no pending litigation, and must have obtained consent from all partners. The LLP must also have filed all annual returns and statements of accounts up to the date of closure. If the LLP has any secured creditors, their consent is mandatory. The application is made in Form 24 (LLP) along with a statement of accounts and an affidavit.

If the LLP has assets or liabilities, it cannot be struck off and must go through formal winding up. In such cases, the LLP must appoint a liquidator and follow the procedure under the LLP Act. The ROC may also initiate suo motu strike-off if the LLP has been inactive for two consecutive years.

An OPC can be closed voluntarily if it has not commenced business within 180 days of incorporation, or if it has ceased operations and has no assets or liabilities. The closure is governed by the Companies Act, 2013 and the Companies (Incorporation) Rules, 2014.

For a strike-off application under Section 248 of the Companies Act, the OPC must have no outstanding liabilities, no pending litigation, and must have obtained consent from the sole member and director. The OPC must have filed all annual returns and financial statements up to the date of closure. The application is made in Form STK-2 along with a statement of accounts and an affidavit.

If the OPC has assets or liabilities, it cannot be struck off and must go through formal winding up under Section 271 of the Companies Act. The ROC may also initiate suo motu strike-off if the OPC has been inactive for two consecutive financial years.

No, an LLP or OPC cannot be closed through the strike-off route if it has any outstanding loans, liabilities, or pending litigation. The strike-off process is designed only for entities that are dormant and have no financial obligations.

If the entity has liabilities, it must first settle all debts or obtain a no-objection certificate from all creditors. For secured creditors, their consent is mandatory. If the entity cannot settle liabilities, it must go through formal winding up, which involves appointing a liquidator, realising assets, and distributing proceeds to creditors.

The ROC will reject any strike-off application if it finds that the entity has outstanding liabilities. In such cases, the entity must either settle the liabilities or initiate winding up proceedings. Directors or partners may also face personal liability if they attempt to close the entity without settling debts.

For both LLP and OPC closure, the following documents are typically required:

• Statement of accounts: A declaration that the entity has no assets or liabilities, or a detailed list if any exist.
• Affidavit: An affidavit from all partners (LLP) or the sole member/director (OPC) confirming the entity's status.
• Consent letters: Consent from all partners, members, directors, and secured creditors.
• Indemnity bond: An indemnity bond to cover any future claims against the entity.
• Board resolution: A resolution passed by the board of directors (OPC) or partners (LLP) authorising the closure.

For LLPs, Form 24 (LLP) is used, while for OPCs, Form STK-2 is used. Both forms require the entity to have filed all annual returns and financial statements up to the date of closure. If any returns are pending, they must be filed before applying for closure.

If an LLP or OPC does not meet the eligibility criteria for voluntary strike-off, it cannot be closed through that route. The entity must either:

• Rectify the non-compliance: File pending returns, settle liabilities, or obtain necessary consents.
• Initiate formal winding up: If the entity has assets or liabilities, it must go through winding up under the LLP Act or Companies Act.
• Face ROC action: If the entity remains inactive, the ROC may initiate suo motu strike-off or file a petition for winding up. Directors or partners may face disqualification or personal liability.

Non-compliance with closure requirements can lead to penalties, including fines and prosecution. For example, failure to file annual returns can result in a penalty of up to ₹1,00,000 for LLPs and ₹5,00,000 for OPCs. Directors of OPCs may also be disqualified from being appointed as directors for five years.

If you are considering closing your LLP or OPC, first verify whether your entity meets the eligibility criteria. If it does, gather the required documents and file the appropriate form with the ROC. If your entity has outstanding liabilities or pending returns, consult a qualified professional to guide you through the rectification or winding up process.

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This page provides preliminary information. It is not legal advice. For your matter, consult a qualified professional.