The process of closure of an LLP is known as the winding-up of LLP. Being an artificial person it cannot die a natural death so, winding-up is considered to be the death of the company. The assets of the company are disposed of to meet the liabilities. The remaining surplus is then distributed among the partners.
There are various types by which the winding up of LLP can be done which are as follows:
The process of winding up by the consent of a majority of members is known as Voluntary winding up. A declaration is made by the members, claiming the company is debt-free or the debts to be paid in a year.
The prior step to this process is that the company wants to wind up. When the tribunal finds out that the company has fewer than 2 members for more than 6 months, the proceedings of winding-up are initiated by the tribunal. There are cases in which the company is not able to clear its debts or has acted in a manner that is not of just and equitable nature then the role of tribunal comes into place.
Winding-up is the first step in the process of dissolution of the company. In winding up all the assets are disposed of and in dissolution, the company ceases to dispose of its name from the ROC Register.
These are the following steps involved :
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