Conversion from LLP to Private Limited Company is suitable for medium and large-scale or capital intensive businesses, start-ups as it allows outside funding to be raised easily, limits the liabilities of its shareholders, has lower tax rates, and enables them to offer employee stock options to attract top talent. Limited Liability Partnership (LLP) registered in India with 2 or more partners can be converted into a Private Limited Company as per the provisions contained in Section 366 of the Companies Act 2013.
A Private Limited Company is a type of business structure, which provides separation between ownership and management, provides flexibility in the transfer of ownership and management. However, the private limited company may induct up to 200 shareholders and shares of which are prohibited from being publicly traded. Therefore, nowadays, many Limited Liability Partnerships (LLPs) are converting into a Private Limited Company for more growth and expansion purpose.