Conversion of LLP into Company


As globalisation is seeking its peek the world is moving towards corporatisation and professionalism.  Everybody knows that LLP is a modern era body corporate but the increasing demand and market blocks the very essence of the same. Therefore a need arises of company and there our topic is process of conversion of LLP into a Company.

Ministry of affairs passed a notification on 31st may, 2016 allowing conversion of LLP into Company under the rules known as ‘Companies Authorised to Register Amendment Rules, 2016‘ as the former is not mentioned in Companies Act, 2013. The various ways of conversion

Conversion of LLP to Company

Process for Conversion of LLP into company

STEP 1: consent of partners

The assent of all the partners in the form of resolution must be taken by conducting a meeting having propaganda of conversion of LLP into company under section 366, of the Companies Act, 2013. Authorisation must be given to required partners for executing the steps papers, deeds, and documents required for registration.

STEP 2: Name approval

LLP have to apply for name availability through Part A of Spice+ Form. Now the interesting fact is that the business could be run without the name change, except the addition of private limited or limited word in conjunction to LLP (subject to availability of name as per guidelines of Companies Act). The name is valid for a period of 20 days.

STEP 3: Newspaper Advertisement

The LLP shall publish an advertisement in a newspaper in English and in any vernacular language, circulating in the district in which Limited Liability Partnership is situated in prescribed format (Form URC-2) about registration under this act/conversion of LLP into company for seeking any objections. The objections can be made by any party within 21 days of the publication of the advertisement. The LLP needs to address all the objections, if received any.

The advertisement copy shall be served to the Registrar where the LLP is registered.

STEP 4: Form filing

The next step is to file form URC-1 along with SPICE+, INC-33, INC-34 and Agile form.

  • E-form URC-1: Application by company for registration under Section 366

Documents to be attached:

1. List showing the names, address and occupation of the persons named as members with details of shares held by them, if any

2. List showing the first directors of Company along with their particulars.

3. Copy of LLP agreement and Incorporation Certificate

4. Statement of assets and liabilities of LLP supplemented by a certification of chartered accountant in practice, dated not earlier than 15 days of filing form no. URC-1 along with the financials of previous year.

5. Copy of latest income tax return of LLP

6. Undertaking of proposed directors signifying the oath of compilation with requirements of Indian stamp Act, 1899

7. Certificate from a CA/CS/CWA certifying the compliance with all the provisions of Stamp Act, to the extent applicable

8. Written consent/ no objection certificate from all secured creditors.

9. Written consent of majority of partners.

10. Publication of advertisement seeking public objections at least 21 days before filing form.

  • E –form Spice+/INC-33/INC-34 and Agile : E-form spice plus/INC-33/INC-34/Agile in addition to URC-1 as linked form with all the attachment as required in normal course procedure of incorporation have to be filed.

a) Spice + : Incorporation of company

The basic details of the company and the directors are filled along with the details of PAN/TAN application.

  • DIR-2 declaration from first directors with the copy of id proof and residential address
  • Proof of Registered Office (Rent Agreement and Utility Bill along with NOC from the owner of the property.

b) Preparation of MOA & AOA

After filing of SPICE+ form, the applicant has to fill the e form INC-33 (MOA) and INC-34(AOA) form online at MCA site. State the main objects and ancillary objects in MOA along with the details of the subscribers and their shareholding details. The Articles of the company can be edited as per the need of the company in compliance with the provisions of Companies Act, 2013

c) E- FORM – AGILE (single window form)

It is all in one platform wherein you could fulfill all your purposes which required different routes earlier likewise. Through this form one can obtain:

  • GST Number (Optional)
  • ESI/PF Registration
  • Opening of Bank Account
  • Professional Tax Registration (In case of Maharashtra)

Submit all the forms (URC-1, Spice+, INC-33, INC-34, Agile, and INC-9 on MCA portal and pay the requisite fee.

Step 5: Certificate of incorporation

The Registrar on being satisfied will issue Incorporation certificate containing details of CIN, PAN & TAN and mail the requisite details.

Treatment under capital gain

The decision given under various case laws defines that the conversion of LLP into Company does not accounts for capital gain as there is no transfer involved. Further considering the provisions of Companies Act with the Income Tax Act relating to capital gain , when a firm is registered as a Company as per the process , no capital gain arises to the firm. There is no dissolution of firm; hence section 45(1) of Income Tax Act is not applicable.

Also when shares of Company are allotted to partners in consideration of the capital held in firm , there is no transfer of capital assets as per section 2(47)(iii) of the Income Tax Act.

The referred case laws are

  • Bombay high court in CIT v texpin engineering and manufacturing co. (2003)
  • Well pack packaging vs. Dy. CIT (2003)
  • Valipattabhiram roa vs. Shri ramanuja ginning & rice factory (P) ltd (1986).

Author Bio

Qualification: CA in Practice
Company: Goyal Mangal & CO.
Location: Jaipur, Rajasthan, IN
Member Since: 08 May 2020 | Total Posts: 4
CA Pulkit Goyal, Partner and Founder of the firm is a fellow member of the Institute of Chartered Accountants of India (ICAI) having experience in the profession of Chartered Accountancy and thorough understanding of the corporate as well as non-corporate entities taxation system. Experience in F View Full Profile

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  1. Raju says:

    If the company is converted in the middle of financial year does we have to file the separate IT Returns for each period
    i.e. one for LLP & one for Pvt Ltd

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August 2022