What is Partnership Firm/LLP?

A partnership firm is an organization which is formed with two or more persons to run a business with a view to earn profit. Each member of such a group is known as partner and collectively known as partnership firm. These firms are governed by the Indian Partnership Act, 1932.

A limited liability partnership is a legal entity, liable for the full extent of its assets. The liability of the partners, however, is limited. Hence, LLP is a hybrid between a company and a partnership. These Partnerships are governed by the LLP Act, 2008. 

Conversion of Partnership firm/LLP into Company

A Partnership Firm/LLP can be converted into a Company registered under Companies Act, 2013, for such conversion there is need to prepare a list of documents and file the same with ROC.

Process for Conversion of Partnership Firm/LLP into a Company

First Step:

Hold a meeting of the partners to take assent of majority of its partners summoned for the purpose of registering the Partnership firm under Section 366 of the Companies Act, 2013. And To authorize two or more partners to take all steps necessary and to execute all papers, deeds, documents etc. pursuant to registration of the Partnership firm as a Company.

Second Step:

Make a Public announcement by way of Newspaper advertisement seeking objections (if any) within 21 clear days from the date of Publication. Such announcement shall be in Form No. URC-2, which shall be published in English Newspaper and in any Vernacular language circulating in the district in which Partnership Firm/LLP is situated.

Third Step:

Obtain No objection certificate from the concerned Registrar of Firms or Registrar of Companies (LLP);

Fourth Step:

Obtain No Objection certificate from the secured creditors (if any).

Fifth Step:

Prepare and File the following below mentioned Forms.

Fifth Step Prepare and File the following below mentioned Forms

 Documents required to be attached

In E-form URC-1

  • A list showing the names, addresses, and occupations of all persons named therein as members with details of shares held by them.
  • A list showing the particulars of persons proposed as the first directors of the company.
  • An affidavit from each of the persons proposed as the first directors, that he is not disqualified to be a director under sub-section (1) of section 164 and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief.
  • A list containing the names and addresses of the partners of the firm/LLP.
  • Deeds of partnership/LLP Agreement and in case the deed of partnership/LLP Agreement was revised at any time in the past, copies of the principal and all subsequent deeds/Agreements including the latest, along with the certificate of the registration issued by Registrar of firms, in case the firm is registered
  • A statement of assets and liabilities of the Partnership Firm/Limited Liability Partnership duly certified by a chartered accountant in practice which is made as on a date not earlier than thirty days of the filing of form no.URC-1
  • A copy of latest income tax return of the Partnership Firm/LLP.
  • A copy of Newspaper Advertisement.
  • an undertaking that the proposed directors shall comply with the requirements of Indian Stamp Act, 1899 (2 of “1899)
  • written consent or No Objection Certificate from all the secured creditors of the applicant
  • written consent from the majority of Partners
  • a statement specifying the following particulars:—

> the nominal share capital of the company and the number of shares into which it is divided;

>  the number of shares taken and the amount paid on each share;

>  the name of the company, with the addition of the word “Limited” or “Private Limited” as the case may require, as the last word or words thereof;

In E-form Spice+

  • DIR-2 declaration from first Directors along with Copy of Proof of Identity and residential address.
  • NOC from the owner of the property.
  • Proof of Office address (Conveyance/ Lease deed/ Rent Agreement etc. along with rent receipts);
  • Copy of the utility bills (not older than two months)

Benefits of Conversion of Partnership Firm into Company

PARTICULARS PARTNERSHIP FIRM COMPANY
Distinct entity Not a separate legal entity Is a separate legal entity under the Companies Act, 1956/2013 .
Perpetual Succession It does not have perpetual succession as this depends upon the will of partners It has perpetual succession and members may come and go.
Credit Worthiness of organization Creditworthiness of firm depends upon goodwill and creditworthiness of its partners Due to Stringent Compliances & disclosures under various laws, Companies enjoys high degree of creditworthiness.

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