Private Limited to LLP |

Conversion of Private Limited Company into LLP

Limited Liability Partnerships (LLP) are emerging as a popular business structure for their multiple advantages. It is simpler corporate form of business where in all good features of both Company and Partnership firm are present. It is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.

Advantages of LLP

LLP can be formed by any amount of capital. There is no need for minimum capital for LLP.

It requires a minimum of 2 partners and there is no limit on the maximum number of partners of the LLP.

The cost of registering LLP is low as compared to a company.

In case of LLP there is no audit requirement unless the contributions of LLP exceedsRs. 25 lakh or annual turnover exceeds Rs. 40 lakh.

The LLP has very limited compliances as compared to the Company. It has to file yearly income tax return and two documents with the ROC i.e. annual return and statement of accounts and solvency.

LLP is treated at par with the partnership firm. The provision of dividend distribution tax is not applicable on LLP. Also under Section 40(b) deductions are allowed on the interest given to partners, any payment of salary bonus commission or remuneration.

Eligibility of Conversion

There is no security interest in its assets subsisting or in force at the time of application; and

The partners of the limited liability partnership to which it converts comprise all the shareholders of the company and no one else.

Documents Required for Conversion of Private Limited to LLP

The following documents have to be attached along with the application for conversion of the private limited to LLP:

Consent of each of the shareholder of the company for conversion of the firm into LLP in the given format.

Incorporation document in Form 2.

Form 3- Form of application and declaration of incorporation of an LLP.

Clearance/no-objection certificate from tax authorities.

Statement of assets and liabilities from the company.

List of all the creditors along with their consent.

Approval from any other country.

Authorization to make a declaration.

Optional attachments, if any.

PROCESS OF CONVERSION OF COMPANY INTO LLP

Obtain Director Identification Number (DIN)

The minimum number of designated partners for the incorporation of an LLP is two. One of them must be an Indian resident. Currently, DIN is only allotted only at the time of incorporation or while adding a person as a director or designated partner in a company or an LLP. Hence, first such members need to be added as directors in the company to obtain DIN. DIN will be required for those who would become designated partners.

Further, it is important to apply for a DSC before applying for the DIN. A Body Corporate can also be a partner in a Limited Liability Partnership through a nominee.

Meeting of Board of Directors of Company

Call a meeting of the Board of Directors.

Pass requisite Resolution for Conversion of Company into LLP.

Pass requisite Resolution to authorize any director to file all the necessary forms with MCA.

Requisite resolution to authorize any director to file all the necessary forms with MCA.

Application for Name Availability
The company will have to apply for reservation of name of LLP And GET NAME APPROVAL CERTIFICATE FROM ROC.

Filing of Incorporation Form with Required Documents
File E Form FiLLiP with ROC along with following Attachments:
Address proof of the registered office of LLP.

The subscription sheets.

Consent to act as a designated partners and partners

Identity and Resident proofs of designated partners and partners

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

Filing of Application for Conversion into LLP

Form 18 is the form for conversion of a company into an LLP. But it needs to be filed with Form for incorporation itself.

This form has information about the conversion of the company into LLP such as:

Whether all the shareholders of the company have given their consent for the conversion of a company into the LLP.

If all the partners of the LLP comprise all the shareholders of the company and no one else.

An up to date Income-tax return is file as per Income tax act, 1961.

Documents including the latest balance sheet and annual returns under the Companies Act, 2013 filed with MCA.

Validating if any conviction, ruling, order, a judgment of any Court, Tribunal or other authority in favour of or against the company is subsisting as on date?

Getting to know regarding any security interest in the assets of the company is subsisting or still in force.

Whether any earlier application for conversion of the said company into limited liability partnership was refused by the Registrar.

If there is a presence of any secured creditors.

File E-FORM- 18 with ROC along with following Attachments:

Statement of the consent of shareholders

Statement of accounts of the company certified as true and correct by the independent auditor

List of all the secured creditors along with their consent

Copy of acknowledgement of latest income tax return (Mandatory)

Certificate of Incorporation from ROC
After complying to all the formalities by the company and approved by the Ministry, ROC to issues a COI as to the conversion of LLP.

Drafting of Limited Liability Partnership Agreement Contents of Agreement are:

Name of LLP

Name of Partners & Designated Partners

Form of contribution

Profit Sharing ratio

Rights & Duties of Partners

Proposed Business

Rules for governing an LLP

Filing of E-Form-3
This form provides information about the LLP Agreement entered into between the partners. This form is to be filed in 30 days from the date of conversion of the company into an LLP.

Attachment Required: LLP Agreement

Filing of E-Form -14 (Intimation to ROC)
After receiving incorporation certificate of LLP it has to be filed within 15 days of the date of conversion.

ATTACHMENTS OF E-FORM 14

Copy of Certificate of Incorporation (COI) of LLP.

Copy of incorporation document submitted in E-Form FiLLiP to ROC.

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