Company to LLP2022-07-17T15:32:46+05:30

Company into Limited Liability Partnership

Any existing Private Limited Company can be converted into LLP as it is a popular form of business organization among entrepreneurs and professionals such as doctors, architects, engineers, lawyers etc. and provides the benefits such as no compulsion of audit, flexibility in operations, less compliance costs etc.

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    Introduction

    A Company may convert itself into Limited Liability Partnership (LLP) as it provides features of both a company and partnership, thereby providing more flexibility for business operations. It provides benefits such as no compulsion of audit for below turnover of 40 lakhs, no limit on capping of borrowings and advancement of loans, no restriction on related party transactions, no requirement to maintain statutory registers, no compulsion on holding board meetings/general meetings, less compliance costs etc.

    It is generally favourable for small and medium-sized enterprises, organizations in the service sector, and professional firms. Any existing Private Limited Company or Unlisted Public Company can be converted into LLP by complying with the legal requirements under LLP Act 2008.

    Advantages Of Converting a Company into LLP

    • No Compulsion of Audit

      There is no mandatory requirement for conducting statutory audit for LLP. Statutory Audit is mandatory only for those LLP where the turnover of LLP exceeds Rs 40 lakhs or where the contribution exceeds Rs 25 lakhs.

    • Flexibility in operations

      The partners of LLP are responsible for the day-to-day business affairs of the LLP unlike a company, LLP is governed by the LLP agreement which is drafted as per partners mutual consent, governing their rights and duties.

    • Less Compliance burden

      The compliances of LLP are relatively less than Private Limited Company. LLP is not required to appoint a mandatory auditor. However, LLP has to file its statement of accounts and annual return with ROC every year.

    • Fewer Restrictions

      In an LLP there is no limit on the maximum number of partners, as compared to a private limited company wherein there is a restriction on 200 members. Therefore, an LLP can induct unlimited partners. Further, there is no restriction on acceptance or grant of loans or investments by LLP, no prohibition on related party transactions.

    Requirements For Conversion of Company to LLP

    • Every Shareholder of company shall become partner of LLP

    • Minimum 2 Designated Partners (At least 1 of the designated partners shall be an Indian Resident)

    • DIN/DPIN of 2 Designated Partners

    • DSC of Designated Partners

    • No pending forms for payment or processing in respect of the company.

    • No open (unsatisfied) charges / loans should be pending against the company or any proceedings at any Court/Tribunal.

    • Company should be having share capital

    • Company should not be a Section 8 Company (Section 25 as per old act)

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

    What Is Included In Our Conversion of Company into LLP package?

    • LLP name search and approval

    • Digital Signature Certificate (DSC) for 1 Designated Partner

    • Preparation of Documentation, papers, declaration, affidavit for conversion

    • Statement of Assets and Liabilities certified by auditor

    • Filing of Form 2 (FILLIP) and Form 18 with the ROC

    • Certificate of Conversion by Registrar of Companies (ROC)

    • LLP Agreement Drafting

    • Filing LLP Agreement with MCA in Form 3 of LLP

    • New PAN and TAN for LLP

    Procedure for Conversion of Company into LLP

    • Collection of required documents

      In the very first step, the applicant has to send us the required documents of the existing company as per the checklist for the purpose of conversion. We will then verify the documents provided, check the eligibility of the entity for conversion and proceed towards the next step.

    • Application for Name Approval

      Applicant has to provide proposed name of LLP, main objects, name of partners, and all other relevant information of the existing company which shall be submitted to MCA for approval.

    • Application for Digital Signature Certificate (DSC)

      Once the name is applied, we shall apply the Digital Signature Certificate (DSC) of designated partners for digitally signing the forms. If the designated partners already have DSC, then this step can be skipped.

    • Submission of Form for Conversion

      After the name is approved and DSC is generated, we need to prepare and submit Form FILLIP and Form 18 along with other required documents for final approval to MCA.

    • Get Certificate of Conversion

      After successful submission of forms, we shall get the certificate of registration on conversion, which shall be a proof that the company has been converted into LLP.

    • Submission of LLP Agreement

      After conversion into LLP, all the partners should execute the LLP Agreement, and a copy of that LLP agreement is required to be filed with the ROC within 30 days from the date of incorporation/conversion of LLP. Stamp duty as per applicable rate has to be paid on such agreement.

    • Change of Details in other registrations

      After the Company is converted into LLP, we have to make changes in other registrations which were previously obtained by company such as PAN, TAN, GST, EPF, Professional Tax Registrations etc.

    Documents Required for Conversion of Company into LLP

    • Certificate of Incorporation of Company

    • PAN and TAN of Company

    • Memorandum of Association (MOA) and Articles of Association (AOA) of Company.
    • List of current shareholders of the company or copy of register of members

    • Consent of all shareholders for Conversion of Company to LLP

    • List of Creditors and their consent for Conversion of Company to LLP (if any)

    • Copies of Financial Statement, Auditor report, Income tax return (ITR) of the company previously filed

    • Pending Litigation against company (if any)

    • Statement of Assets and Liabilities of Company

    • Details of any dues towards Banks or Financial institutions, Income tax Dept, GST Dept, Central / State / Local Government Authorities.

    • KYC Documents such as PAN, Identity and Address proof of director and shareholder.

    • Utility bills such as Electricity bill, Water Bill, Gas Bill along with NOC from the owner of premises for office address of company.

    • Any other documents as may be prescribed

    Effects of Conversion of Company into LLP

    • The private company shall be deemed to be dissolved and the name of the private limited company will be removed from the register of the Registrar of Companies.
    • On conversion, all properties, assets, interests, rights, privileges, liabilities, and obligations of the private limited company are transferred to the LLP.
    • On conversion, all the existing liabilities, obligations, agreements, contracts and appointments of company shall continue in the name of LLP
    • Any conviction, ruling, order or judgment of any Court, Tribunal or other authority in favour of or against the company may be enforced by or against the LLP.
    • Permits or licenses issued under any written law to the Private Limited Company, and which are active before the date of conversion will not be transferred automatically to the Limited Liability Partnership.
    • The limited liability partnership shall mention in its official correspondence that it was converted from a company into an LLP and the name and registration number of the company from which it was converted for a period of 12 months from the date of registration..

    FAQ

    How much time is needed for conversion of company into an LLP in India?2022-01-22T14:52:42+05:30

    On average it takes 1-2 months of time for completion of conversion, 3 different approvals are required from government bodies, one for name confirmation, second for incorporation and conversion, and last one for LLP Agreement. However, this is dependent on the approval from Government Authorities.

    Do I need to be physically present during this process?2022-01-22T14:52:11+05:30

    There is no such requirement, all the required documents are filed electronically, so you would not need to be physically present. You would just need to send us scanned copies of all the required documents, forms, and LLP agreement.

    Is it mandatory for all shareholders to become partner in the LLP?2022-01-22T14:51:37+05:30

    Yes, all the shareholders/members of the Company shall become the partners of the LLP on conversion.

    How many minimum shareholders are required in the company to convert into LLP?2022-01-22T14:51:12+05:30

    There should be a minimum of 2 shareholders/members in the company for conversion into an LLP, if there are more than 2 shareholders than all the shareholders/members of the Company shall become the partners of the LLP on conversion

    Who can be a designated partner of an LLP on conversion?2022-01-22T14:50:42+05:30

    The partners of LLP shall have to nominate minimum 2 designated partners amongst them.

    Can a company with open or unsatisfied charge convert into LLP?2022-01-22T14:49:30+05:30

    No, a company with open or unsatisfied charges cannot convert itself into LLP.

    Is it required to file Balance sheet, annual return and Income Tax Return (ITR) before conversion of company into LLP?2022-01-22T14:48:57+05:30

    Yes, at least one balance sheet and annual return should have been filed by the company after its incorporation and all the pending filings has to be completed.

    Can I convert my private limited company into LLP with a completely different name or new name?2022-01-22T14:46:52+05:30

    No, private limited company or unlisted public company can be converted into LLP with the same name as that of the company at the time of conversion.

    Is the consent of secured creditor required for conversion of company into LLP?2022-01-22T14:46:21+05:30

    Yes, the consent of secured creditor is mandatory for conversion of company into LLP

    Do the partners need to pay capital gain tax on conversion of Company to LLP?2022-01-22T14:44:35+05:30

    On conversion of Company to LLP, capital gains tax shall not be applicable if the transfer satisfies the conditions prescribed under Income Tax Act 1961.

     

    What are the mandatory compliances for LLP?2022-01-22T14:38:31+05:30

    Know about mandatory compliances here – https://registrationarena.com/annual-compliance-of-llp/

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