Process and Requirements for Converting a Company to LLP

Summary: The conversion of a private or unlisted public company into a Limited Liability Partnership (LLP) is governed by the LLP Act, 2008. This transition offers benefits such as limited liability, tax advantages, operational flexibility, reduced compliance, and perpetual succession. To qualify, the company must not be a Section 8 entity, have no pending charges, and all shareholders must become LLP partners. The registration requires at least two partners, one of whom must be an Indian resident, and digital signatures for designated partners. The conversion process includes board approval, name reservation, and filing of incorporation and conversion forms with the Registrar of Companies. Essential documents include identity proofs, address verification, consent forms, and financial statements. Upon approval, the Registrar issues a Certificate of Incorporation, after which the LLP must notify the ROC within 15 days. Post-incorporation, the LLP Agreement must be filed within 30 days.

(Sections 56, 58, and Schedule III of the LLP Act, 2008 govern the conversion of a Private Company into LLP and Section 57 and Schedule IV of the LLP Act, 2008 govern the conversion of an unlisted Public Company into LLP)

BENEFITS OF LLP:

1. Reduced risk: Partners have limited liability for the partnership’s debts, protecting their personal assets

2. Tax benefits: LLPs can carry forward losses and unabsorbed depreciation of the company

3. Flexibility: LLPs offer flexible management structures and operations

4. Reduced compliance: LLPs have fewer compliance costs and audit requirements

5. Investor confidence: LLPs can have better audit procedures and governance

6. Perpetual succession: LLPs can continue even if partners leave or pass away

7. LLPs IS ideal for business expansion because there’s no limit on the number of partners

8. LLPs can retain the tax advantages of a partnership

9. Other benefits

MANDATORY CONDITIONS FOR CONVERSION:

1. Company should not be section 8 company;

2. No unsatisfied charges should be pending against the company;

3. Company should be having share capital;

4. No forms should be pending for payment or processing in respect of company; All the shareholders of the company becomes partners of the LLP;

5. At least one balance sheet and annual return should have been filed by the company after its incorporation.

MINIMUM REQUIREMENT FOR REGISTRATION:

1. Minimum 2 Partners;

2. Minimum 2 Designated Partners;

3. At least 1 of the designated partner must be an Indian Resident;

4. If a body corporate is a partner, it has to nominate a natural person as its nominee

5. No Minimum Capital Requirement;

6. DPIN (Designated Partner Identification Number) for all the Designated Partners;

7. DSC (Digital Signature Certificate) for one of the Designated Partner;

8. Copy of acknowledgement of latest income tax return;

FORMS TO BE FILLED:

DOCUMENTS REQUIRED FOR CONVERSION:

1. PAN Card and Aadhar card of the Partners/Designated Partner;

2. Identity Proof of the Partners/ Designated Partners (Voter id/ Driving License/ passport-anyone);

3. Address Proof of the Partners/ Designated Partners( Self attested Latest Electricity Bill / Telephone Bill / Mobile Bill / Bank Statement with latest entries (any one);

4. Electricity Bill of the proposed Registered Office of the LLP (In case of owned);

5. No-Objection Certificate from the Landlord, electricity bill and Rental Agreement Copy between the LLP and the Landlord (In case of Rented Office);

6. Subscriber Sheet;

7. Consent of designated partner;

8. DSC of designated partner;

9. Name of Proposed LLP;

10. Capital of Proposed LLP and capital Contribution of Proposed Partners;

11. Phone No. and E-Mail Id of Proposed Partners;

12. Copy of acknowledgement of latest income tax return.

PROCEDURE:

• CONVENE BOARD MEETING – A Board Meeting shall be duly Convened to Pass Necessary Resolution for:

1. Approving the proposal for Conversion of Company into LLP;

2. Authorizing any Director to apply for name of LLP.

• APPROVAL OF NAME – Check availability of name and get approval in RUN Form for LLP.
• FILE FILLIP FORM – File Form FiLLiP e. form for incorporating LLP with other below following forms and documents with the Registrar of Companies :

1. Proof of registered office address of LLP

2. Subscribers’ sheet including consent

3. Aadhar Card and PAN card of all the partners other than designated partners self-attested

4. Proposed Main Object clause

5. Approval of regulatory authority, if required

6. Detail of LLP and/ or company in which partner/ designated partner is a director/ partner (if any).

• FILING OF APPLICATION FOR CONVERSION – E-form 18 is required to be filed in case of conversion of existing company into LLP. This form should be filed together with the incorporation form and following documents should be attached with e-form 18:

1. Copy of acknowledgement of latest income tax return;

2. Statement of Assets and Liabilities of the company duly certified as true and correct by the auditor;

3. List of all the secured creditors along with their consent;

4. Statement of consent of shareholder;

5. Any other information can be provided as an optional attachment.

• CERTIFICATION OF REGISTRATION –

Registrar after satisfying himself about completeness in documents and various compliances, issue certificate of incorporation. In case of any discrepancies found in the form, then it is needed to be resubmitted and uploaded again with satisfying the remarks by MCA.

• INTIMATION OF CONVERSION TO ROC –

After receiving Certificate of Incorporation of LLP, the LLP is required to file form 14 to the ROC within 15 days of issue of certificate of incorporation for intimating about its conversion into LLP.

Following document are required along with this form:

1. Copy of the certificate of incorporation of LLP is a mandatory attachment;

2. Any other information can be provided as an optional attachment.

• POST INCORPORATION COMPLIANCE –

Within 30 days of the incorporation file Form 3– LLP Agreement with the signed and stamped, notarized LLP Agreement.