An unlisted public company can be converted directly into a Limited Liability Partnership (LLP) without first converting into a private limited company. This corrects a common misconception. Such direct conversion is permitted provided specific conditions are met: all shareholders must become partners of the LLP; no company assets should be mortgaged at the time of application; the LLP must be registered in the same State as the company; and no-objection certificates must be obtained from all members and creditors. All assets, liabilities, rights, and obligations of the company automatically vest in the LLP, while existing agreements continue in the LLP’s name. Statutory compliances, including Income Tax, GST, and ROC filings, must be up to date. Post-conversion, properties must be mutated in the LLP’s name, and for 12 months, LLP correspondence must disclose the conversion details. The process is governed by Chapter X (Fourth Schedule) of the LLP Act, 2008 and Rule 40 of the LLP Rules, 2009, with prescribed forms and documentation.
Can an Unlisted Public Company be converted into Limited Liability Partnership (LLP) directly?
Short Answer- Yes
It is a common myth that an unlisted public company has to be first converted into private limited and then only it can be converted into LLP.
So, it can be directly converted into LLP provided following things are taken care of:
Basics:
1. All shareholders of unlisted public company shall become partners of LLP.
2. No asset of company should be mortgage at the time of filing application.
3. LLP should be situated in same State as company.
4. NOC be obtained from all members for such conversion.
5. All property, assets, interests, privilege, rights, liabilities of company shall become that of LLP.
6. Consent from all creditors of company be obtained.
7. All due Income Tax, GST and ROC returns should have been filed.
8. Once the conversion is done, the LLP shall, as soon as possible, get all property such as land, building etc. get registered/mutated in its name.
9. All existing deeds, bonds, agreements of company shall continue in the name of LLP.
10. For a period of 12 months after conversion, all correspondence of LLP shall include a statement that from … date, … company having CIN…… was converted into LLP.
Applicable Provisions:
1. Chapter X Section 57 of LLP Act, 2008: Fourth Schedule should be referred.
2. Rule 40 of LLP Rules, 2009: Form 18 to be filed with ROC.
Documentation & Form Filings Involved:
1. Statement of Assets & Liabilities certified by Auditor- not older than 30 days from the date of filing.
2. Form MGT-14 for updating Special Resolution passed by shareholders for conversion; Form FILLIP for incorporation of LLP & Form 3 for LLP Agreement; Form-18 for conversion.
Please note that for conversion of private limited companies or firms into LLP, the applicable provisions and Schedule of LLP Act differs.
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