Restoring Struck-Off LLP: Process and Fees

LLP Strike Off: Understanding the Problem

Thousands of LLPs in India get struck off every year by the Registrar of Companies under Section 75 of the LLP Act, 2008. The MCA conducts periodic drives to identify non-compliant LLPs and removes them from the register, effectively dissolving them without any court order.

Strike off happens when an LLP fails to file its mandatory annual returns (Form 8 and Form 11) for two or more consecutive financial years. Many small business owners are unaware that their LLP has been struck off until they face practical consequences: bank accounts frozen, inability to file tax returns, or creditors pursuing partners personally.

The good news is that a struck-off LLP can be restored to the register through an NCLT application, provided you act within the statutory time limits and comply with all pending requirements. This guide explains the complete restoration process with actionable steps, costs, and timelines.

Why LLPs Get Struck Off

The Strike Off Process

• Step 1: ROC sends a notice to the LLP at its registered office asking whether it is carrying on business
• Step 2: If no response within 30 days, ROC publishes notice in the Official Gazette
• Step 3: After 30 days from Gazette publication, ROC strikes the LLP's name from the register
• Step 4: LLP is dissolved from the date of strike off notification

Consequences of LLP Strike Off

Strike off has serious legal and practical consequences for the LLP and its partners:

• Legal entity ceases to exist: The LLP cannot transact business, enter contracts, or file regulatory returns
• Bank accounts frozen: Banks freeze the LLP's accounts upon receiving strike off notification from MCA
• Tax complications: Income tax returns cannot be filed, and TDS certificates cannot be issued
• Property vests in government: Under Section 75(5), all LLP property becomes bona vacantia (government property)
• Partners remain personally liable: Under Section 75(4), partner liability for LLP debts continues despite strike off
• GST registration cancelled: GSTN typically cancels the GST registration after strike off
• Impact on partners' DIN: Designated partners may face disqualification from holding directorships in other companies

Step-by-Step LLP Restoration Process

Step 1: Assess Restoration Feasibility

• Verify the date of strike off from the MCA portal (V3 portal or legacy site)
• Confirm you are within the 3-year limitation period for NCLT application
• Calculate the total pending compliance: number of pending Form 8 and Form 11 filings
• Estimate total fees and penalties (₹100 per day per form for late filing)
• Check whether any partners have DIN disqualification issues that need resolution

Step 2: Prepare All Pending Returns

• Prepare Form 8 (Statement of Account and Solvency) for all pending years
• Prepare Form 11 (Annual Return) for all pending years
• Get the Form 8 certified by a practising tax professionals
• Calculate the late filing fee: ₹100 per day from the due date to the filing date
• Keep all returns ready for filing immediately before or after the NCLT order

Step 3: Prepare NCLT Application

The NCLT application requires the following documents:

• Application/petition in prescribed format addressed to the NCLT bench having jurisdiction
• Affidavit of the designated partner(s) explaining reasons for non-compliance
• LLP deed and all amendments
• Statement of assets and liabilities as on the date of strike off
• Bank statements for the last 3 years
• Income tax returns for the period before and during strike off
• NOC from income tax department (or latest ITR acknowledgement)
• All pending Form 8 and Form 11 (drafted but not yet filed)
• Proof of payment of all outstanding government fees

Step 4: File Application with NCLT

• File the application at the NCLT bench having jurisdiction over the LLP's registered office
• Pay the NCLT filing fee (₹5,000 to ₹10,000 depending on the bench)
• Serve copies of the application on the ROC and any other affected parties
• NCLT typically admits the application within 2 to 4 weeks and fixes a hearing date

Step 5: NCLT Hearing and Order

• Attend the hearing (through your advocate) and present the restoration case
• ROC may appear to object or support the restoration
• NCLT examines whether all pending compliances are in order
• If satisfied, NCLT passes a restoration order directing ROC to restore the LLP's name
• NCLT may impose conditions: file all pending returns within 30 days, pay penalties within 60 days

Step 6: Post-Order Compliance

• Submit the certified copy of NCLT order to ROC along with Form 24
• File all pending Form 8 and Form 11 returns with applicable penalties
• ROC restores the LLP name on the register
• Inform banks to unfreeze the LLP's bank accounts
• Re-apply for GST registration if cancelled
• Update all government registrations and licences

Penalties and Fees Calculation

Sample Penalty Calculation

For an LLP that missed filing both Form 8 and Form 11 for 3 years:

• Form 8 penalties: 3 forms x approximately 365 days x ₹100 = approximately ₹1,09,500
• Form 11 penalties: 3 forms x approximately 365 days x ₹100 = approximately ₹1,09,500
• Total penalty estimate: ₹2,19,000 (before the 2024 amnesty scheme if applicable)

Note: MCA periodically announces amnesty schemes (like the LLP Settlement Scheme) that significantly reduce penalties. Check the MCA website for any active scheme before paying full penalties.

Common Grounds for NCLT to Grant Restoration

NCLT typically grants restoration when the applicant demonstrates:

• Non-filing was due to genuine oversight, not deliberate non-compliance or fraud
• The LLP was carrying on business or intended to carry on business at the time of strike off
• All pending returns and fees are ready to be filed or have been filed
• No fraud, misrepresentation, or illegal activity by the LLP or its partners
• Third parties (creditors, customers, employees) will benefit from restoration
• The LLP has assets, ongoing contracts, or pending receivables that need to be managed

Impact on Partners and Designated Partners

The strike off and restoration process has significant personal implications for partners:

During Strike Off Period

• Designated partners may be disqualified from being appointed as directors in other companies under Section 164(2)(a) of the Companies Act
• Partners remain personally liable for all LLP debts (Section 75(4))
• Partners cannot sign contracts on behalf of the LLP since it no longer exists as a legal entity
• Personal credit scores and financial reputation may be affected

After Restoration

• All partner rights and obligations are restored as if the strike off had not occurred
• Disqualification of designated partners is typically lifted (may need separate application to ROC)
• Partners can resume operating the LLP normally
• Contracts and transactions entered during the strike off period may need legal validation

LLP Settlement Scheme and Amnesty Programmes

MCA has periodically announced amnesty schemes that reduce late filing penalties for LLPs:

Previous Schemes

• LLP Settlement Scheme, 2020: Allowed filing of pending Form 3, Form 4, Form 8, and Form 11 with a fixed fee of ₹10,000 per form (regardless of delay period), valid from 16th March to 13th June 2020
• LLP Form 4 Amnesty Scheme, 2023: Waived additional fees for delayed filing of Form 4 (change in LLP agreement)
• General Late Fee Waivers: MCA occasionally extends deadline extensions during emergencies (as done during COVID-19)

How to Check for Active Schemes

• Visit the MCA website (www.mca.gov.in) and check the "Circulars" section
• Monitor the MCA's social media handles for announcements
• Consult your professional who tracks regulatory updates
• IncorpX provides alerts on all MCA compliance schemes and deadlines

If an amnesty scheme is active when you file for restoration, you can significantly reduce the penalty burden. Some clients have saved ₹1,00,000 or more by timing their restoration with an active amnesty scheme.

Restoration vs Fresh Incorporation

Partners of a struck-off LLP often face the choice: restore the old LLP or incorporate a new one?

Recommendation: Restore the old LLP if it has valuable assets (brand, contracts, receivables, property, licences). Incorporate a new LLP if the old one had no significant assets and the penalties are disproportionately high compared to the LLP's value.

Challenges in LLP Restoration

• High penalties: ₹100 per day per form accumulates to lakhs over multiple years. This is the biggest financial barrier for small LLPs with limited resources
• NCLT delays: Some NCLT benches have significant case backlogs, extending the restoration timeline to 6 to 12 months or longer
• Missing financial records: If the LLP did not maintain proper books during the period of non-compliance, preparing Form 8 becomes difficult. An Expert may need to reconstruct accounts
• Partner disputes: If partners disagree about restoration, the application process becomes complicated. All designated partners should ideally agree on restoration
• DIN deactivation: If designated partners' DIN has been deactivated, it must be reactivated separately before the LLP restoration process can proceed
• Tax assessment demands: The income tax department may have issued assessment demands during the strike off period. These must be addressed as part of the restoration process
• GST cancellation complications: If the GST registration was cancelled suo motu, re-registration may require additional documentation and personal hearing at the GST office

Preventing Future Strike Off

After restoration, implement these compliance safeguards to prevent recurrence:

• Set up annual filing reminders: Calendar alerts for Form 8 (due 30th October) and Form 11 (due 30th May) every year
• Appoint a compliance professional: Engage a professional firm to handle annual filings on a retainer basis
• Use MCA V3 portal: Register for email notifications from the MCA portal about filing deadlines
• Maintain proper books: Keep regular books of accounts so Form 8 preparation is straightforward
• File income tax returns on time: ITR filing for LLPs is due by 31st July (non-audit) or 31st October (audit required)
• Monitor DIN status: Ensure designated partners' DIN is active by filing DIR-3 KYC annually

Contact IncorpX for annual compliance packages that include all mandatory LLP filings. Our compliance management service ensures you never miss a filing deadline.

Frequently Asked Questions About LLP Status Check

Before starting the restoration process, verify the LLP's current status on the MCA portal:

• Check LLP status: Visit the MCA V3 portal, navigate to "LLP Filing" and then "View Signatory Details" or "LLP Master Data". Enter your LLPIN to see the current status (Active, Struck Off, Under Process of Striking Off)
• Download strike off order: The strike off order is published in the Official Gazette. You can download it from the India Code or eGazette website by searching for the LLP name or LLPIN
• Verify LLPIN: The LLP Identification Number (LLPIN) remains the same even after strike off. It is reactivated on restoration. Do not confuse the LLPIN with a new LLP's number
• Check partner details: Verify that designated partners' details and DIN status are correct on the MCA portal before filing the restoration application

How IncorpX Helps with LLP Restoration

IncorpX provides end-to-end LLP restoration services with a dedicated team experienced in NCLT proceedings:

• Feasibility assessment: Evaluate whether restoration is possible, calculate total costs and penalties, and advise on the best approach
• Document preparation: Prepare all pending Form 8 and Form 11 returns, draft NCLT petition, compile supporting documents
• NCLT filing and representation: File the application, attend hearings, and handle all Tribunal interactions
• Post-restoration compliance: File pending returns with ROC, update all registrations, unfreeze bank accounts, and bring the LLP into full compliance
• Ongoing compliance support: Set up annual filing reminders and compliance calendar to prevent future strike off

Contact IncorpX for a free assessment of your LLP restoration case. We handle LLP restoration at all NCLT benches across India and have successfully restored over 100 struck-off LLPs for our clients.