Summary: The conversion of a partnership firm into a Limited Liability Partnership (LLP) is governed by Section 55 and the Second Schedule of the LLP Act, 2008 along with LLP Rules, 2009. Many firms opt for this transition due to the benefits such as limited liability, separate legal identity, and ease of compliance. The conversion process begins with reserving a name through Form RUN on the MCA portal, followed by obtaining digital signatures for the designated partners. Next, Form FiLLiP and Form 17 are submitted along with necessary attachments including consent forms, ID proofs, address proofs, and the partnership deed. If approved, the Registrar of Companies issues a Certificate of Incorporation (COI) in Form 19. Post-incorporation, an LLP agreement must be executed and filed via Form LLP-3 within 30 days. All partners of the firm become partners in the LLP, and the firm’s PAN remains the same. Assets, liabilities, and rights of the firm automatically transfer to the LLP. Additional compliance steps include updating statutory records like PAN, GST registration, and bank accounts to reflect the LLP’s name. Documentation required for the process includes a statement of assets and liabilities certified by a Chartered Accountant, latest income tax return acknowledgment, secured creditors’ consent, auditor certificate, and approvals from regulatory bodies (if applicable). This structured conversion ensures continuity of business operations while offering the advantages of an LLP framework.
PROCEDURE FOR CONVERSION OF FIRM INTO LLP
Section 55 and Second Schedule of the LLP Act, 2008 and LLP Rules, 2009 deals with.
A. Conversion of Firm into LLP
In recent year, there has been an increase in the number of partnership firms converting into LLP. The shift is largely driven by the flexible business operation and the benefit of separate legal entity status that an LLP structure offers.
B. Advantage of Conversion of Firm into LLP
- Limited Liability Protection to partners
- Separate legal identity, LLP to own assets and enter contracts in its own name
- Ease of Compliance
- No restriction on capital contribution
- Perpetual succession
C. Steps to followed for Conversion of Firm into LLP
1. Name reservation Application:
- The First Step is to file Form RUN Application for Reservation of name by paying a fee of Rs.200/- on the MCA V3 Portal.
- The name shall contain the word LLP etc.
2. Get Digital Signature Certificate
- The next step is to obtain the class 3 digital signature of the Designated Partners / Partners.
- DSC is required for filling of Incorporation forms to the CRC(ROC)
3. Filling of Form FiLLiP along with LLP Form No. 17
- The next step is to file the incorporation application by using the Form FiLLiP Form along with INC-9 (Consent by Designated Partners) and Form 17 (Application and statement for the conversion of a firm into Limited Liability Partnership (LLP)) by paying of prescribed Fees.
4. Get License & COI
After Filling of Application, the ROC(CRC) examine the application and if it is satisfied with the application, Certificate of Registration on Conversion (COI) in Form 19 will be issued as per the provisions of the LLP Act, 2008 and LLP Rules, 2009.
- Following documents shall be attached with Form FiLLiP:
1) Consent of Designated Partners / Partners in Form-9;
2) Copy of PAN card & Aadhar card of Designated Partners / Partners;
3) Proof of Registered office like Sale Deed/Lease Deed/Rent Agreement etc;
4) Latest Utility Bill of Registered office like Electricity Bill / Gas Bill/ Telephone Bill;
5) NOC of owner if registered office is taken on rent/lease;
6) Proof of Identity (Voter ID/Driving License/Passport/Aadhar Card) and Residence (Bank Statement/Electricity Bill/Telephone bill not older than 2 months) of Designated Partners / Partners not having DIN;
7) Subscriber Sheet.
- Following documents shall be attached with LLP Form No. 17:
1. Statement of Assets and Liabilities of the firm duly certified as true and correct by the Chartered Accountant in practice not older than 15 days from the date of application.
2. Copy of acknowledgement of latest income tax return
3. List of secured creditors along with their consent to the conversion (if any)
4. Auditor Certificate.
5. Statement of Shareholder / Partner as per prescribed format.
6. Copy of Partnership Deed of the Firm and Certificate of Registration of Firm in case Firm is registered.
7. Approval from any regulatory body/authority (if any)
5. Filling of Form LLP-3
Drafting and Executing LLP Agreement on stamp paper of appropriate value of Stump duty and File Form LLP-3 within 30 days from the date of incorporation.
+ Important Notes:
> All the Partners of Firm shall be the Partners of LLP.
> PAN No. of Firm will remain same.
> All the Assets, liabilities, rights and obligation of Firm get vested in the LLP.
+ Post Conversion Compliance.
> Update PAN, GST, Bank accounts, etc., in the name of LLP.
> Make necessary changes in agreements, licenses, etc.
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