Conversion of Company into LLP

Conversion of Private Limited Company/Unlisted Public Company into LLP:

LLP is a unique form of legally recognized corporate entity, which integrates the features of both the limited corporations and the traditional partnership firms. As it is a unique Hybrid Combination of both Company and Partnership, this LLP is especially suitable for small to medium-sized business enterprises and professionals particularly

Steps for Conversion of Company to Limited Liability Partnership

1) Obtain DIN No of all proposed Designated Partner/ Partner.*

DIN Application Procedure

I) Self attested Pan Card

II) Self attested Address Proof

Same is to be attached in DIN Form DIR-3 after attestation of Professional.

DSC of the applicant as well as Professional is required to be attached.

*DIN of the directors of the Company would already be there. However, if any shareholder of that Company want to be the Partner in LLP, Then his DIN No is mandatory. Otherwise, DIN No of Directors would suffice for being Designated partners in LLP.

2) Form 1 is to be filed first for Conversion of Company into LLP

Attachment of Form 1:

i) Board Resolution for conversion is to be attached.

We shall receive the Name Approval Certificate once the form is approved of the same.

Eg: If the name of the Company was ABC Pvt Ltd, for conversion of LLP you will get the name as ABC LLP. Name will remain the same. Only suffix would change.

3) Form 18 & 2 is required to be filed under Linked Form.

Form 18 (Application and Statement for conversion of a private company/ unlisted public company into limited liability partnership (LLP)

Attachment of Form 18

i) Consent of Shareholders for conversion

ii) Annual set of Accounts not older than 30 days from date of filing.

iii) Latest Acknowledgment of ITR Return

iv) Declaration stating that Company shall not borrow funds as per RBI Act, SEBI Act and Companies Act, 2013 until Company gets converted into LLP.

Form 2 (Incorporation document and subscriber statement)

Attachment of Form 2

i) Address Proof not older than 2 months.

ii) NOC from the Owner of Premises to use the premises as Registered office Address Proof

iii) Subscribers Sheet (Hand written).

iv) Interest in other entity.

We shall receive the Certificate of Incorporation with the approval of Form 18 & Form 2.

4) After receiving Certificate of Incorporation, file Form 3 with ROC which is Information with regard to limited liability partnership agreement.

Attachment  of Form 3:

LLP Agreement.

With this, the Process of Conversion from Company to LLP is completed.

Key Points

i) Audit is required if Turnover is above 40 Lacs or Contribution is more than 25 Lacs

ii) Two Annual Form has to be filed i.e.

Form 8 (Statement of Solvency)

Form 11(Annual Return)

iii) No Registers are required to be maintained.

iv) Minimum 2 designated partners are required.

v) LLP Agreement should cover all the aspects like contribution, responsibilities, operation of accounts etc.

vi) Contribution of LLP should be same as that of the Paid up share capital of the Company before conversion.

vii) Directors of the Company become the designated partners of LLP after conversion. If shareholders do not wish to be the partners in LLP, they should transfer the shares before conversion or else they become the partners in LLP by default. Any new person can become partner/designated partner at the time of conversion with the approval of the existing members.

viii) If all the shareholders of the Company become partners in LLP, then the ratio of paid up share capital of the shareholders is the ratio of contribution of the Partners in LLP. No change in the ratio. (For Eg: If Mr. A was holing 10% shares in ABC Pvt Ltd, then his share of contribution will also be 10% of the capital of LLP)

Note: It may be noted that it has been clarified by the Ministry of Corporate Affairs that a HUF or its Karta cannot become partner or designated partner in LLP.

Please refer all the relevant section, rules, notifications, amendments as applicable. The Author is not responsible for any losses incurred.

Content is merely for sharing knowledge. For any queries, Author can be reached at caswetamakwana@gmail.com or 9819244185.