LLP closure vs Private Limited Company closure — what is the difference?
LLPs use Form 24 under LLP Rules 2009 (fee: Rs 500), while Private Limited Companies use STK-2 under the Companies Act 2013 (fee: Rs 10,000). Both require zero assets and liabilities, clearance of all annual return defaults, and an indemnity bond. The eligibility conditions and process steps are broadly similar, but the governing law, forms, and filing fee differ significantly.
The fundamental legal difference
A Private Limited Company is governed by the Companies Act 2013. Its voluntary strike-off is governed by Section 248(2) of that Act, and the application is made via STK-2 under the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. A Limited Liability Partnership is governed by the LLP Act 2008. Its voluntary strike-off is governed by Rule 37 of the LLP Rules 2009, and the application is made via Form 24. These are entirely separate legal frameworks administered under separate rules, even though both are processed by the Registrar of Companies (ROC).
Application form
Company: STK-2 (filed on MCA21 portal, signed with DSCs of all directors). LLP: Form 24 (filed on MCA21 portal, signed with DSCs of all designated partners). Both forms require similar information: entity details, reason for cessation of business, and certification of nil assets and liabilities. Both require attachment of supporting documents and a CA-certified statement of accounts.
Government fee
Company (STK-2): Rs 10,000. LLP (Form 24): Rs 500. This is a significant difference. The Rs 10,000 fee for company strike-off was introduced under the 2016 Rules. The Rs 500 LLP fee has remained unchanged. For budget-conscious founders, this makes LLP closure somewhat cheaper from a government fees perspective, though professional (CA/CS) fees tend to dominate the total cost in either case.
Annual return obligations to clear before filing
Company: All pending AOC-4 (financial statements) and MGT-7 (annual return) filings must be cleared. A company that has not filed annual returns for two or more financial years is typically classified as a defaulter. The CFSS (Companies Fresh Start Scheme) has been a useful tool for clearing arrears when notified by the MCA — check whether a current amnesty scheme is available. Late fees for company annual returns can be substantial.
LLP: All pending Form 11 (annual return) and Form 8 (statement of accounts and solvency) must be cleared. LLP annual returns also attract late fees for default. Unlike companies, there is no equivalent of the CFSS for LLPs — LLPs must file and pay late fees individually for each year of default. This can make clearing LLP return arrears more expensive per year of default than for companies.
Indemnity bond
Both processes require an indemnity bond executed on stamp paper. For companies, the bond is signed by all directors; for LLPs, by all designated partners. In both cases, the bond affirms that all liabilities have been settled and that the signatories accept personal liability for any claims that arise after the strike-off. The stamp duty for the bond varies by state, typically between Rs 100 and Rs 500.
Liability of directors and partners after closure
For companies: under Section 248(7) of the Companies Act, the liability of every director continues even after the company is struck off, in respect of obligations that existed before the strike-off. For LLPs: under the LLP Act, the liability of designated partners continues after strike-off in relation to any act or omission that occurred before the strike-off. The concept is identical across both structures — the corporate shield is removed at strike-off, and personal liability survives for pre-existing obligations.
Suo motu strike-off by the regulator
The ROC can strike off a company under Section 248(1) of the Companies Act 2013 if it has not filed annual returns for two or more consecutive years. Similarly, the Registrar of LLPs can initiate strike-off proceedings against an LLP that has not filed its annual returns. In both cases, the strike-off is published in the Official Gazette and the entity's name is removed from the register. Directors of a struck-off company face potential disqualification under Section 164(2) of the Companies Act. There is no equivalent automatic disqualification mechanism under the LLP Act, but designated partners of a suo motu struck-off LLP may face scrutiny in any future regulatory filings.
Timeline
Both processes take broadly comparable time once the application is filed in order: typically 3 to 6 months from submission of Form 24 or STK-2 to the gazette notification of strike-off. The actual timeline in practice depends on the ROC's workload, whether queries are raised, and how quickly the applicant responds to those queries. Neither process has a guaranteed turnaround time.
Quick comparison summary
Application form: STK-2 for company, Form 24 for LLP. Governing law: Companies Act 2013 for company, LLP Act 2008 and LLP Rules 2009 for LLP. Government fee: Rs 10,000 for company, Rs 500 for LLP. Annual returns to clear: AOC-4 and MGT-7 for company, Form 11 and Form 8 for LLP. Condonation scheme: CFSS may be available for companies, no equivalent for LLPs. Personal liability after closure: directors for company, designated partners for LLP. Suo motu strike-off: by ROC under Section 248(1) for company, by Registrar of LLPs for LLP. Timeline: 3 to 6 months for both.
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Talk to a CA →Which is easier to close — an LLP or a Private Limited Company?
Both processes are broadly similar in structure, but LLP closure tends to be slightly simpler and cheaper because the government fee is lower (Rs 500 vs Rs 10,000) and LLPs typically have fewer compliance obligations outstanding. However, if an LLP has never filed Form 11 or Form 8, clearing those arrears can be time-consuming. For a company with years of pending AOC-4 and MGT-7 returns, the CFSS condonation scheme can help. Practically, the total time and cost depend more on the state of the entity's filings than on whether it is an LLP or company.
This article is for general information only. For your specific situation, consult a practicing CA.
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