Pvt Ltd to LLP – Eligibility and conversion process

An LLP is governed by the Limited Liability Partnership Act, 2008. This act was introduced on 1st April 2008 with the main idea of promoting MSME (Micro, small and medium enterprises) To be eligible to open up such a form of business, you must make sure that you fulfill the eligibility criteria. The Eligibility criteria for conversion of private companies into LLPs have been clearly laid down by the Act as under–

If a private company wishes to convert into an LLP, it must first comply with the following requirements –

1. There is no security interest in its assets subsisting or in force at the time of application; and
2. The partners of the limited liability partnership to which it converts comprise all the shareholders of the company and no one else.

Process of conversion of company into LLP

A company can convert itself to an LLP provided it follows certain procedures beginning from obtaining the Director Identification Number (DIN) of its partners. Once the DIN is obtained, a resolution for conversion must be passed in the board meeting.

The next step is to file an application for the name of the LLP. This is done by filing the e-form LLP-1 with ROC along with the Board resolution passed by the Company approving the conversion into LLP. Once the application is accepted, the company may obtain its name Approval Certificate from ROC. Upon receiving the certificate, the partners are required to draft a LLP agreement containing –

1. Name of LLP
2. Name of Partners & Designated Partners
3. Form of contribution
4. Profit Sharing ratio
5. Rights & Duties of Partners
6. Proposed Business
7. Rules for governing the LLP

It is not necessary to have the LLP Agreement signed at the time of incorporation, as the details of the same needs to field in e-form 3 within 30 days of incorporation. But in order to avoid any dispute between the partners as to the terms & conditions of the agreement after the conversion into LLP.

After all this, the next step required is to file an E-Form- 2 with ROC along with –

1. Proof of Address of Registered office of LLP
2. Subscription sheet signed by the promoters
3. (Notice of Consent & Appointment of Designated Partners with their personal details)

The final step if to file the application for conversion along with

1. Statement of shareholders.
2. Incorporation Documents & Subscribers Statements in Form 2 filed electronically.
3. Statement of Assets and Liabilities of the company duly certified as true and correct by the auditor.
4. List of all the Secured creditors along with their consent to the conversion
5. Approval of the governing council (In case of professional private limited companies)
6. NOC from Income Tax authorities and Copy of acknowledgement of latest income tax return.
7. Approval from any other body/authority as may be required
8. Particulars of pending proceedings from any court/Tribunal etc

After all formalities and filings been complied with by the applicants and approved by the Ministry, Registrar of LLP to issue a Certificate Of Registration in form no. 19 as to conversion of the LLP. The Certificate of Registration issued shall be the conclusive evidence of conversion of the LLP.

After Receiving Incorporation Certificate Limited liability partnership to file within 15 (fifteen) days of the date of registration, information to the concerned Registrar of Companies with which it was registered under the provisions of the Companies Act, 2013 (1 of 2013) about the conversion and of the particulars of the limited liability partnership in within 15 days of conversion into LLP.

More and complete details about LLP and its conversion is available on the official site of IndiaFilings. So, if you think your startup has to be moved a step ahead but yet hasn’t reached the stage of a company, then LLP is the perfect fit. Go ahead, find out everything about the conversion and register your startup as an LLP today!

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