IS YOUR LLP PLACED IN “NOTICE OF STRIKING OFF” ? WHY & WHAT TO DO?

A total number of not less than 1752 due to non-filing of Financial Statements and Annual Returns for previous two years. In this write up endeavor is made on discussing the validity of this notice issued to the LLP and the primary remedy available to the LLPs.

Out of 1752 LLPs,

About to be struck off by the Registrar of Companies, Delhi & Haryana, vide Notice No. ROC-DELHI / LLP/SM/PHASE -II/2385,	1171 LLPs
RoC Chennai vide F.No.ROC/CHN/STK/LLP/37(2)/2018	514 LLPs
RoC Chandigarh vide Public Notice No. ROC/CHD/LLP/Section75/303 dated 31st May, 2018, 01st June, 2018 & 01st June, 2018 respectively.	67 LLPs

This comes after the regular pressure from the Government to streamline the entities and force them mentally to think that compliances are not optional in nature and thin line to observe here is: ‘you cannot be allowed to run businesses if you are taking annual compliances for granted.’

Why did this happen?

Many Businessmen considered LLP at par with normal Partnership Firms and they thought that they have to file Income Tax Return only. Even there have been instances where Form 3 (Filling of LLP Agreement) has not been filed, whereas the filings of Form 3 is mandatory in nature and it cannot be left out.

FILING OF FINANCIAL STATEMENTS AND ANNUAL RETURNS

Requirement of Form 8:

As per Section 34 of the LLP Act read with Rule 24 (4) of LLP Rules, 2009, Every LLP is required to prepare the Books of Accounts and Statement of Solvency within 6 months from the end of each Financial Year as on the last day of Financial Year and to be signed by the Designated partner.

Such Books of Accounts and Statement of Solvency is required to be filed to Roc within 15 days from the end of six months of the Financial Year to which such Statement of Account and Solvency relates.

Requirement of Form 11

As per Section 35 of the LLP Act, 2008 read with Rule 25 of LLP Rules, 2009, Every LLP is required to file an Annual Return within 60 days from the end of Financial Year. The Annual Return of an LLP having turnover up to Five Crore rupees or contribution up to rupees fifty lakh should be accompanied with a certificate from a Designated Partner that Annual Return contains true and correct information.

In all other cases, the Annual Return should be accompanied with a Certificate from a Company Secretary in practice that he has verified the particulars from the books and records of the LLP and found them to be true and correct.

CRUX OF THE NOTIFICATIONS

On 31st May 2018 & 01st June, 2018, Ministry of Corporate Affairs (MCA) issued a notices vide Notice No. ROC-DELHI / LLP/SM/PHASE -II/2385, F.No. ROC/CHN/STK/LLP/37(2)/2018 & Public Notice No. ROC/CHD/LLP/Section75/303, wherein Registrar of Companies (RoC), Delhi & Haryana, RoC Chennai & RoC Chandigarh has proposed to remove the name of 1171, 514 & 67 Limited Liability Partnerships (LLPs) respectively from the Register of LLPs for non-filling of Financial Statements and Annual Returns for previous two years (causing the ROC to reasonably believe that these LLPs are non-functioning and non-carrying on any business or Operation).

However, ROC has also mentioned in the notice that any LLP aggrieved from such strike-off may raise written objection showing the reasons for non-filling within these 30 days.

It is to be noted that the Notice is issued in pursuant to Section 75 of the LLP Act, 2008 read with Rule 37 of the LLP Rules, 2009 wherein the ROC is empowered to strike off the name of any LLP after giving the reasonable opportunity of being heard.

Section 75 of the LLP Act, 2008 is produced below:

The section empower the Registrar to strike-off defunct LLPs in such manner as may be prescribed (Rule 37 of the LLP Rules, 2009), where the Registrar has reasonable cause to believe that a LLP is not carrying on business or operation in accordance with the provisions of this Act.

Provided that the Registrar shall, before striking off the name of any limited liability partnership under this section, give such Limited Liability Partnership a reasonable opportunity of being heard.

Relevant excerpts from Rule 37 of the LLP Rules, 2009 are as follows:

37 (1) Where a limited liability partnership is not carrying on any business or operation -

(a) for a period of two years or more and the Registrar has reasonable cause to believe the same, for the purpose of taking suo moto action for striking off the name of the LLP; or

STRIKEOFF NOTICE BY ROC

The Registrar shall send a notice to the limited liability partnership and all its partners, of his intention to strike off the name of the limited liability partnership from the register and requesting them to send their representations along with copies of the relevant documents, if any, within a period of one month from the date of the notice:

(3) At the expiry of the time mentioned in the notice under sub-rule (1), or one month under sub-rule (2) above, the Registrar may, by an order, unless cause to the contrary is shown by the LLP, or the Registrar is satisfied that the name should not be struck off from the register, strike its name off the register, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the limited liability partnership shall stand dissolved.

Question arises:

Whether the Notice has been sent to every LLP and its Partners at their given E-mail addresses as required to be sent in Rule 37 read with Rule 36 (3) (iii)?

Status of the LLPs on MCA Portal after Strike-off Notice

MCA Portal Status in the Master Data of LLPs named in the strike-off notices are appearing as “Under Process Of Strike Off”, which means the LLPs are not Struck-off but only the notices issued against them for strike-off and they can save themselves from Striking-Off by giving representation of non-compliances.

REMEDY AVAILABLE TO THE LLP

As mentioned in Sub-Rule 1 of Rule 37 of LLP Rules, 2009, ROC has given an opportunity to the LLP wherein LLPs can make representation along with the Books of Account and Statement of Solvency along with the Annual Return of every year for which filing is not completed, LLPs also need to show reasonable cause to Roc to believe that the LLP is functioning and the Operations are being carried on along with genuine reasons of non-compliance.

COURTESY : CS Deepika Shukla