LLP vs OPC Closure: Which Is Easier and Faster?

The primary difference lies in the governing law and the procedural requirements. An LLP is governed by the Limited Liability Partnership Act, 2008, and its closure is handled under Rule 37 of the LLP Rules, 2009. An OPC is governed by the Companies Act, 2013, and its closure is handled under Section 248 of the Act.

For an LLP, the process is generally simpler and faster because there are fewer statutory filings and no requirement for a board meeting or shareholder resolution. An OPC, being a company, requires a board resolution, a special resolution from the sole member, and compliance with the Companies Act's winding-up provisions. The timeline for an LLP closure can be as short as 3-4 months if all dues are cleared, while an OPC closure typically takes 6-9 months due to additional procedural steps.

The LLP closure process is faster. Under Rule 37 of the LLP Rules, 2009, an LLP can apply for strike-off if it has not commenced business within one year of incorporation or has been inactive for the preceding five years. The application is made in Form 24, and the Registrar of Companies (ROC) typically processes it within 60-90 days.

For an OPC, the process under Section 248 of the Companies Act, 2013, requires the company to pass a special resolution and file Form STK-2 with the ROC. The ROC then issues a public notice and waits for objections. This adds at least 30-45 days to the timeline. Additionally, the OPC must settle all liabilities, file all pending annual returns, and obtain a no-objection certificate from its creditors, if any. This makes the OPC closure process slower and more cumbersome.

The key steps for closing an LLP under Rule 37 are:

1. Board Resolution: The designated partners must pass a resolution to close the LLP.
2. Settlement of Dues: All liabilities, including taxes, employee dues, and creditor payments, must be settled.
3. Filing of Form 24: The LLP must file Form 24 with the ROC, along with a statement of assets and liabilities and an indemnity bond.
4. Public Notice: The ROC issues a public notice inviting objections. If no objections are received within 30 days, the ROC proceeds with the strike-off.
5. Strike-off Order: The ROC issues an order striking off the LLP from the register.

The entire process typically takes 3-4 months. The LLP must also ensure that all annual returns (Form 11 and Form 8) are filed up to the date of closure.

The key steps for closing an OPC under Section 248 of the Companies Act, 2013, are:

1. Board Meeting: The board must pass a resolution recommending closure.
2. Special Resolution: The sole member must pass a special resolution approving the closure.
3. Filing of Form STK-2: The OPC must file Form STK-2 with the ROC, along with a statement of affairs and an indemnity bond.
4. Public Notice: The ROC issues a public notice in the Official Gazette and on its website, inviting objections within 30 days.
5. Settlement of Liabilities: The OPC must settle all liabilities and obtain a no-objection certificate from creditors, if any.
6. Strike-off Order: The ROC issues an order striking off the OPC from the register.

The process takes 6-9 months. The OPC must also file all pending annual returns (Form AOC-4 and Form MGT-7) and ensure compliance with the Companies Act.

For LLPs, common reasons for rejection include:

• Pending annual returns: If Form 11 or Form 8 are not filed, the ROC will reject the application.
• Outstanding liabilities: The ROC may reject the application if there are unpaid taxes or creditor dues.
• Incomplete indemnity bond: The indemnity bond must be properly executed and notarized.

For OPCs, common reasons for rejection include:

• Pending annual returns: The OPC must file all pending returns before applying for closure.
• Outstanding liabilities: The ROC may reject the application if there are unpaid taxes or creditor dues.
• Lack of special resolution: The special resolution must be properly passed and filed with the ROC.
• Objections from creditors: If creditors object, the ROC may delay or reject the application.

To avoid delays, ensure all statutory filings are up to date and all liabilities are settled before applying for closure.

The costs for closing an LLP are generally lower. The government fee for filing Form 24 is minimal (around ₹200-500). Professional fees for a CA or CS can range from ₹5,000 to ₹15,000, depending on the complexity.

For an OPC, the costs are higher. The government fee for filing Form STK-2 is around ₹500-1,000. Professional fees for a CA or CS can range from ₹10,000 to ₹30,000, due to the additional procedural requirements like board meetings, special resolutions, and public notices.

Additionally, if the OPC has outstanding liabilities or pending returns, the costs can increase significantly. For both entities, the cost of settling liabilities (taxes, employee dues, creditor payments) must also be factored in.

If you are considering closing an LLP or OPC, start by ensuring all statutory filings are up to date and all liabilities are settled. For an LLP, the process is simpler and faster, but for an OPC, you will need to pass a special resolution and file additional forms. Consult a qualified Company Secretary or Chartered Accountant to guide you through the specific requirements for your entity.

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