Procedure for conversion of LLP to Private Limited Company

Procedure for conversion of LLP to Private Limited Company

Ministry of Corporate Affairs has passed a notification on 31st May, 2016 in such notification its allowed conversion of LLP into Company. This article will give you glimpse of provisions prescribed, procedure involved, in conversion of LLP into a private limited company.

1. Provisions to refer:

• Section 366 to Section 374 of Companies Act, 2013
• Chapter XXI PART-1 Companies Authorised to register under Companies Act, 

2. Advantages of LLP Conversion into Company:

1. No capital gain tax.

2. Carry forward of unabsorbed losses and depreciation.

3. Continuation of Brand Value.

4. Existing LLP is replaced as a private limited company.

3. Prerequisites of LLP:

• Check whether LLP has filed its statutory returns upto date and file all LLP agreements including supplementary agreements with Registrar of Companies (“RoC”).
• All filed forms should be in the approved status.
• If not, complete all filings prior to start conversion procedure.
• Same name of LLP can be continued if available words Private Limited shall be added with such name.
• The amount of contribution shall be equal to amount of capital and there cannot be change in such amount.
• All the partners shall become the shareholders of the Company.
• Certificate from Professional (CA/CS) regarding compliance of statement of accounts.
• Hold meeting of Partners and pass the resolution for assent of all Partners for conversion of LLP into Private Limited Company and authorise one or more Partner to do all such acts and deed necessitate in this regard and main object of LLP.
• Apply for name on MCA Portal under SPICE+ Category.Once the name gets approval it shall be valid for 20 days from the date of name approval in case of a new company and sixty days in case of change of name of existing company.

Essential requirement for conversion LLP to private limited company

• There must be atleast two members for registration as private limited company
• LLP must be registered, if it is nor registered file application for its registration.
• Approval from all partners is required.
• No objection certificate (NOC) is required from ROC where such LLP is registered.

Procedure required filing with ROC for conversion of LLP into private Company:

• E-form URC-1:File URC-1 within 30 days from name approval with ROC.
• Publish adversitment in Form URC-2 in an english newspaper and local newspaper (seeking objection if any within 21 days from publication) circulating in district  where LLP is suitated.

1. Particulars of members/partners along with the details of shares held by them

2. Declaration of two or more directors verifying the particulars of all members/ partners

3. Affidavit from all the members/partners for dissolution of the entity

4. Copy of certificate of registration of the entity

5. Copy of the instrument constituting or regulating the entity

6. Copy of Newspaper advertisement

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

Conditional:

8. Consent of majority of members is mandatory to be attached in case company is limited by shares or Unlimited company.

9. Consent of at least three-fourth of members agreeing for registration under this part is mandatory to be attached in case company is limited by guarantee.

10. No objection certificate from the concerned Registrar of Firms or Registrar of Companies (LLP) is mandatory to be attached in case type of entity is Firms/ LLP.

11. No objection certificate/Consent given by secured creditors is mandatory to be attached in case of any secured debt outstanding as on the date of application.

12. Copy of the resolution declaring the amount of guarantee is mandatory in case company is limited by guarantee.

1. Statement of accounts of the company, prepared not later than 6 days preceding the date of application duly certified by auditor, if applicable.

13. Any other information can be provided as an optional attachment(s) .

MOA AND AOA :

While drafting MOA object of conversion should be specified.

Filing of Other E-FORMS ON MCA PORTAL

• DIR 12
• INC-22
• AGILE PRO
• INC-9( with requisites fees)

After due verification in all aspects made for conversion of LLP to Private limited company, a certificate of incorporation will be issued by ROC

Documents required for company registration

• Identity and address proof
• Copy of LLP agreement
• Registered office proof
• Written statement and no objection from creditors.
• List of documents to be submitted by the Director and the Shareholders:

Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)

Scanned copy of Voter’s ID/Passport/Driver’s License

Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill

Scanned passport-sized photograph

Specimen signature (blank document with signature [directors only])

Note: Any one of the directors must self-attest the first three documents. In case of foreign nationals and NRIs, all the documents must be notarised (if currently in India or a non-Commonwealth country) or apostilled (if in a Commonwealth country).

• For the Registered Office:

Scanned copy of Latest Telephone or Electricity or Gas Bill or Water bill

Scanned copy of Notarized Rental Agreement in English

Scanned copy of No-objection Certificate from property owner

Scanned copy of Sale Deed/Property Deed in English (in case of owned property)

Note: Your registered office need not be a commercial space; it can be your residence, too.

Conclusion:

There are various ways of converting a LLP to a company, i.e. slump sale, admitting the company as a partner, dissolution thereof and on dissolution, business being taken over by the company etc.,

In view of the choices available. Conversion should be made in a manner appropriate to a particular situation.Thus, aforesaid are the detailed procedure and documents involved in conversion of LLP into a Private Limited Company. The attachments will play a important  role in conversion approval and all attachments are to be in order for getting the approval.

Hope the information will assist you in your Professional endeavours. In case of any query / information, please do not hesitate to write back to us at khushboojain0908@gmail.com.