Private Limited Company to Limited Liability Partnership

To convert a private company to an LLP, consent from the shareholders is required along with DIN, LLP agreement and certificate from RoC for completing the conversion process. The entire process might take 15-20 working days.

Why Limited Liability Partnership?

LLP is a worldwide recognised business entity registered with the ministry of corporate affairs and governed by the Limited Liability Partnership Act, 2008 which limits the liability of partners and provides flexibility of a partnership. It helps small to medium size businesses which do not want government interaction and less compliance work. It is seen as an alternate response to traditional partnership and also called the ‘Hybrid’ of a partnership enterprise and a company.

Conditions required for conversion to limited liability partnership

  • The company has no security interest in its assets at the time of application.
  • The partners of the LLP will be no one but the shareholders of the company.
  • The Total sales, turnover or gross receipts in the business of the company do not exceed INR Sixty Lacks (60 Lacks) in any of the three preceding previous years
  • Up to date filing of income tax returns
  • No court or tribunal proceeding should be pending.
  • The partners receive consideration only by way of allotment of shares in LLP
  • There is no concept of share capital, but there has to be some contribution from each partner
  • The company should not be a Section 25 company/ section 8 company under the Companies Act, 2013.
  • The company should file at least one balance sheet and annual return after its incorporation.
  • No e-Forms should be pending for payment or processing in respect of the company.

Documents required for the conversion

  1. DIN (director identification number) for all the designated partners.
  2. DSC (digital signature certificate) for any two of the designated partners.
  3. LLP agreement
  4. A copy of Board Resolution of the company which is becoming a designated partner through a nominee.
  5. Registered office proof.
  6. Latest income tax return
  7. Filing of form 1, form 2, form 14, form 18 and form DIR-3.

Detailed procedure for the conversion of Private Company to LLP

1.Obtaining DIN

Designated partners must file for a DIN. Minimum no of partners need to be incorporated are two, between them one must be an Indian.

Note: Before applying for DIN, one must file for DSC.

2. Board Meeting

A board meeting is called for. In the meeting a resolution is passed for the consent for the conversion of the company to LLP and to authorise any director for approving the name of the LLP.

3. Name approval certificate

File e-form LLP 1 for registering the name of the company. Along with the board resolution passed by the company approving the conversion and following information:

  • All the partner's name
  • The office address of the LLP
  • Proposed business activity of the LLP
  • Capital contributed by the partners
  • Importance of the chosen name
NOTE: all forms must be digitally signed by the applicant using DSC

4. LLP Agreement

A written agreement between the partners of the Limited Liability Partnership or between the LLP and its partners which establish mutual rights and duties of the partners towards LLP is called LIMITED LIABILITY PARTNERSHIP AGREEMENT which needs to be drafted with the content as follows:

  • -Name of LLP
  • -Name of Partners & Designated Partners
  • -Form of contribution
  • -Profit Sharing ratio
  • -Rights & Duties of Partner
  • -Proposed Business
  • -Rules for governing the LLP

5. FILING OF INCORPORATION DOCUMENTS

This e-form 2 has basic information about the LLP like LLP’s office location, a capital contribution of the designated partners and number and name of LLPs the director and needs to be filed with ROC. The following attachments which need to be attached along are:

  • Address proof of the registered office of LLP.
  • Subscription sheet signed by the promoters.
  • Notice of Consent & Appointment of Designated Partners with their details.
  • Detail of LLP(s) and company(s) in which designated partner is a director or a partner
  • A copy of Board Resolution of the company which is becoming a designated partner through a nominee.

6. Application for conversion

Form-18 is the sole form for the conversion of the company into an LLP. It needs to be filed with form 2 and ROC along with the following attachments:

  • Statement of shareholders.
  • Incorporation Documents & Subscribers Statements in Form 2 filed electronically.
  • Statement of Assets and Liabilities of the company corrected by the auditor.
  • Approval of the governing council (In case of professional private limited companies)
  • NOC from Income Tax authorities and Copy of latest income tax return.
  • Authority approval is to be required.
  • Particulars of pending proceedings from any court etc.
  • List of all the secured creditors and their consent

7. Certificate of registration

After all formalities and filings been composed and approved by the Ministry, registrar of LLP to issue a Certificate of Registration in form no. 19 as to the conversion of the LLP. The Certificate of Registration issued shall act as evidence of conversion of the LLP.

8. Filing E-FORM 3

This form provides information regarding the LLP Agreement entered mutually by the partners attached with LLP agreement

9. Certificate of incorporation

A Certificate of Incorporation to be issued by the ROC.

10. Filing  of LLP-14

LLP-14 must be filed within 15 days after receiving the Certificate of Incorporation to the registrar to personally inform them about the conversion with following attachments:

  • Certificate of Incorporation of LLP formed.
  • Copy of incorporation document

Post-conversion effects

  • The private company will be dissolved completely and its name will be removed from the register of the Registrar of Companies.
  • On conversion, all properties, assets, interests, rights, privileges, liabilities and obligations of the private limited company are transferred to the LLP.
  • The conversion has no bearing on the existing liabilities, obligations, agreements, contracts and continued employment.
  • Permits or licenses issued under any written law to the Private Limited Company, and which is active before the date of conversion will not be transferred automatically to the Limited Liability Partnership. The terms of the license will the deciding factor here. Hence, in most cases, fresh GST registration or FSSAI registration would have to be obtained by the promoters.

Company