The Ministry of Corporate Affairs (MCA) has initiated a comprehensive review of the strike-off procedures for Limited Liability Partnerships (LLPs) that have defaulted on statutory compliance. This review, announced in May 2025, aims to streamline the process of identifying and removing non-operational or dormant LLPs from the official registry. The initiative is a response to increasing concerns over shell entities and long-inactive firms that pose risks to transparency and regulatory oversight. The MCA seeks to improve the efficiency, fairness, and accountability of the strike-off framework under Rule 37 of the LLP Rules, 2009.

As part of the review, the ministry is evaluating how LLPs are currently categorized as defaulters—typically those that fail to file Form 8 (Statement of Accounts) or Form 11 (Annual Return) for two or more financial years. It is also examining whether sufficient notice and rectification time are being provided before a strike-off action is initiated. Additionally, proposed changes include the integration of AI tools to flag repeated non-compliance, the automation of notices via the MCA V3 portal, and a graded penalty system to differentiate between willful defaulters and genuinely inactive firms.

Stakeholder consultations have also been initiated to gather feedback from professionals, compliance officers, and industry bodies. The government aims to strike a balance between cleaning up inactive LLPs from the registry and ensuring that active businesses facing temporary challenges are not unfairly penalized. Experts believe this review will help improve the ease of doing business, boost data accuracy, and restore credibility in the LLP structure by discouraging misuse for fraudulent activities or tax evasion.