Ministry of Corporate Affairs’ latest Circular which provides important clarifications on the provisions of the Limited Liability Partnership (LLP) Act, 2008 with regard to conversion of a partnership firm into LLP.
It has been clarified that the LLP Act, 2008 does not provide for conversion of two or more firms into a single LLP.
Clarifying further, the MCA has said that the provisions of section 58(4) (b) of the LLP Act, 2008 provide that on conversion of a firm into an LLP, as per the provisions of the said Act, all property, assets, interests, rights, privileges, liabilities, obligations relating to the firm and the whole of the undertaking of the firm shall be transferred to and shall vest in the LLP without further assurance, act or deed. Accordingly, if a CA audit firm, being an auditor in a company under the Companies Act, 1956, gets converted into an LLP after complying with the relevant provisions of the LLP Act, 2008, then, such an LLP, in accordance with the provisions of section 58(4) (b) of the LLP Act, 2008 would be deemed to be the auditor of the said company. The relevant appointee company may take note of such change in status of the auditor through a resolution of the Board. I call upon the CA firms and members concerned to take note of the above clarifications and comply accordingly.