“Explore the comprehensive guide to converting a Limited Liability Partnership (LLP) into a Private Limited Company (PLC) under the provisions of the Companies Act 2013. Learn about the eligibility criteria, step-by-step procedures, and post-conversion compliances involved in the conversion process. Understand the advantages, opportunities, and legal requirements for a successful transition. Consult professional experts and legal advisors for efficient navigation through the conversion process.”
Conversion of Limited Liability Partnership (LLP) into Private Limited Company: A Comprehensive Guide to the Provisions of Companies Act 2013
Introduction: The Companies Act 2013 provides a framework for businesses to convert their existing structures into different legal entities to suit their evolving needs. One such conversion is the transformation of a Limited Liability Partnership (LLP) into a Private Limited Company (PLC). This article aims to provide a detailed understanding of the provisions and procedures involved in such a conversion, in accordance with the Companies Act 2013 and the rules made there under.
Overview of Conversion: The conversion process enables an LLP, which is governed by the Limited Liability Partnership Act 2008, to transition into a PLC, which operates under the provisions of the Companies Act 2013. The conversion allows businesses to take advantage of the benefits and opportunities provided by the corporate structure of a PLC, such as limited liability, easier access to capital, enhanced credibility, and increased potential for growth.
Eligibility Criteria for Conversion: To be eligible for conversion, an LLP must fulfill certain criteria outlined in Section 366 of the Companies Act 2013. These include: a. The LLP must be incorporated and registered under the LLP Act 2008. b. The LLP should have no less than two partners at the time of conversion. c. The LLP should have completed at least two years of its existence.
Procedure for Conversion: The conversion process involves several steps and compliances, as outlined below:
1. Board Resolution: The partners of the LLP must pass a resolution approving the conversion. This resolution should be passed by at least two-thirds of the total number of partners.
2. Obtain DIN and DSC: The designated partners of the LLP must obtain a Director Identification Number (DIN) and a Digital Signature Certificate (DSC) as per the requirements of the Companies Act 2013.
3. Name Availability: The next step involves checking the availability of the desired name for the proposed PLC. An application must be made to the Registrar of Companies (ROC) for the reservation of the name. The name should comply with the guidelines specified by the Ministry of Corporate Affairs (MCA).
4. Application to the ROC: Once the name is approved, an application for conversion is submitted to the ROC in the prescribed format along with the necessary documents, including the LLP agreement, statement of accounts, and other required declarations.
5. Submission of Documents: The application for conversion should be accompanied by various documents, such as the LLP agreement, list of partners, statement of accounts and solvency, consent of partners, and NOC from creditors.
6. Publication of Notice: After submitting the application, a notice regarding the proposed conversion should be published in a prescribed form in at least one English newspaper and one vernacular newspaper.
7. Objections and Suggestions: The ROC will invite objections and suggestions from the public and stakeholders within 21 days from the date of publication of the notice. These objections and suggestions will be considered during the conversion process.
8. Approval by ROC: If the ROC is satisfied with the application and the submitted documents, they will issue a Certificate of Incorporation, indicating the conversion of the LLP into a PLC. The Certificate will include the new Corporate Identity Number (CIN) of the PLC.
Post-conversion Compliances: Upon successful conversion, the newly formed PLC must comply with various post-conversion requirements, such as: a. Obtaining new PAN and TAN for the PLC. b. Updating various registrations and licenses with the new entity details. c. Informing relevant authorities, such as the GST department, banks, and creditors, about the conversion. d. Filing necessary forms with the ROC, such as the change in the registered office address, change in directors, etc. e. Altering the letterheads, invoices, and other official documents to reflect the new company name and details.
Conclusion: The conversion of an LLP into a PLC offers several advantages and opens up new avenues for growth and expansion. By adhering to the provisions of the Companies Act 2013 and the rules made thereunder, businesses can successfully transition their legal structure, ensuring compliance and smooth operations in the transformed entity. It is advisable to consult professional experts and legal advisors to navigate through the conversion process efficiently and effectively
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