Introduction:
The Limited Liability Partnership (LLP) is formed under the LLP Act, 2008.
LLP Registration is a famous term among Startups and new entrepreneurs. It can be difficult to operate an LLP type of business as compared to another type of business that offers better opportunities for the growth and development of the business.
So, the benefits offered by the Company can attract the shareholders. That would initiate the conversion of LLP into a Private Limited Company. The term “Conversion of LLP into Private Company” means the process under which the Designated Partners of a Limited Liability Partnership want to expand their business operation by converting into a Private Limited Company.
Benefits of Conversion of LLP into Company:
Compliance Check before proceeding for Conversion of LLP into Company:
- Check Annual Filing Compliance (Form 8 and Form 11) of LLP before filing URC-1
- There is no pending approval of any Form 3 and 4 of LLP.
- There should be a minimum of 7 members in the supposed firm or LLP.
- All the DIN should be Approved.
- digital Signature Certificate. (DSC) should be there of all Designated Partners (because required in MOA and AOA)
Conversion Process of LLP into a Private Limited Company
The following procedure must be followed for conversion of LLP into a Private Limited Company:
Step I: Name Approval – To get the name approved from CRC (MCA), one requires to file Spice Part A that is a portal-based form.
For that, Professionals need to Login from their MCA credentials.
In that option, one has to choose Part I LLP To Company then needs to attach Objects of the Proposed Company along with Board Resolution of Conversion of LLP to Company on the Letterhead of the LLP. The name, approved by the CRC can be used only for 20 days and the name can be extended by more than 20 or 40 days before the expiry of the name by paying an additional challan amount.
Step II. Obtaining DSC and DIN – Every DSC should be registered with the MCA portal in the Associate DSC tab. The DIN should be in approved status on MCA Portal.
Step III. Newspaper Advertisement– After name approval by the CRC, the Professional should proceed for Newspaper Advertisement in two Newspapers (one in English and one in Vernacular language) in URC-2 Format.
Special Note:
- The advertisement should not earlier than 15 days and not more than 30 days from the date of application (URC-1). In Simple meaning, the URC-1 can file to ROC after 15 days of Advertisement and before 30 days.
- Make sure that in Vernacular Language Newspaper our post (URC-2) should be in a vernacular language only not in English Newspaper
Step IV. Check attachments before filing all conversion forms:
In this step, we need to check all the attachments of Spice Part B, Agile, and URC-1.
In eForm Spice Part B and Agile same attachments as we required in the new Company Incorporation.
In URC-1 following attachments are required to attach:
- Affidavit for compliance
- Affidavit from LLP (On Letterhead of LLP)
- Affidavit of Designated Partners
- Certificate from Practicing Company Secretary
- Consent from Designated Partners/ Partners
- Declaration for Share Consideration
- Declaration of Stamp Duty
- Interest in Other Entities of Designated Partners/ Partners
- No Objection Certificate for Address Proof
- LLP Resolution/CTC
- Particular of partners OR members along with their proposed shareholding pattern.
- Latest Audited Financial Statements not older than 30 days from URC-1.
Step V. Filing of Form URC-1, SPICE Part B, eMOA, eAOA, AGILE & INC-9–
In this step, the Professional requires to file Form URC -1, along with all the mandatory forms as mentioned above. However, such a form must be filed within 20 days, starting from the date of name approval.
Special Note:
- These all 6 forms are linked forms
- Attachments of URC-1 should be in the proper size and legible form
- 6 MB size is for individual form not of all forms
Step VI. Post filing of forms–
In this step, the Professional should be aware that these all forms are non-STP forms and requires a regular check on the SRN from Track Transaction Status TAB.
After approval new Certificate has been issued by MCA without any delay.
Conclusion:
In a nutshell, the main reason for the conversion of LLP to a Private Company is to expand and grow the business multi-dimensionally. Usually, an LLP as a business format is not suitable for Private Equity or Venture Capitalists. The reason for the same is that an investor feels more secure and safe while investing in a Private Limited Company.
Therefore, the conversion of LLP into a Private Company is a perfect decision as per the current market dynamics.
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