Limited liability partnerships are popular because of the multiple benefits of a mix of companies and partnerships. LLP offers corporate benefits and partnership flexibility. A limited liability partnership is a legal entity with the limited liability of a partner. LLPs can sign contracts and own real estate in their own name. Each shareholder must submit a declaration and consent to convert the company to an LLP along with the application. 

Documents required to convert a company to LLP 

How Can You Convert Your Pvt. Ltd Company Into An LLP In India

The following documents must be attached to the application for converting to an LLP. 

The consent of each shareholder of the company to convert the company to LLP in the specified format. 

Form 2 Incorporation document. 

Form 3  application and LLP Incorporation Declaration. Customs clearance certificate from the tax office. Statement of company assets and liabilities. 

A list of all creditors with consent.  Approval from other countries. The power of lawyers to make statements. Optional attachment (if any).

You Can Also Click Here To Get Your LLP Registration Today.

Effect of conversion 

Following are some of the implications of converting a  limited liability company to an LLP. 

  • Another partnership is formed.
  • The name of the limited liability company will be removed from the register of the registrar of the Company.  
  • At the time of conversion, all property, assets, interests, rights, privileges, liabilities, and obligations of the limited liability company shall be passed to the LLP.  
  • The conversion does not affect existing liabilities, obligations, agreements, contracts, and continued employment.  
  • Permits or licenses granted to a limited liability company under underwritten law and valid prior to the conversion date will not be automatically assigned to the limited liability company. The terms of the license are decisive here. Therefore, in most cases, you will need to obtain a new GST  or FSSAI registration from the organizer.

Governance and benefits 

Limited Partnerships are governed by the Limited  Partnership Act of 2008. This law was drafted primarily to encourage small businesses. Limited liability companies are given several advantages in continuing this goal. 

  • More scope of autonomy 
  • Less form of compliance  is required for LLPs compared to other companies 
  • There is no limit fixed on the number of partners 
  • There is no statutory minimum number of partner meetings  
  • LLP requires more generous statutory records management requirements 
  • MAT does not apply to LLP 
  • LLP auditing is not mandatory

Companies that cannot convert to LLP 

 All  companies operating in the banking, finance and insurance sectors 

 All  companies have secured/asset-secured loans 

 In addition, all foreign direct investment companies apply the conditions related to the operation 

 All  companies with external commercial loans 

 All FDI companies follow the approval route.

Procedure for the Conversion of a Company Into an LLP

Step 1: Get the DIN (Director Identification Number). 

For designated partners who do not yet own DIN. 

Step 2: Board meeting should be held to consider the conversion plan. In order to convert a company to an LLP, a resolution of the board of directors must be passed and the directors must approve the application for the name of the LLP.  

Step 3. Next, you need to book the name of the LLP and get a certificate of approval from the Registrar of Company

Step 4: Submit the e-Form and then complete it in ROC  with the following document 

 Proof of LLP office address 

 Subscription sheet 

 Consent of the nominated partner 

 Proof of identity for all partners 

 Certificate of residence for all named partners and partners 

 Details of other companies with which LLP partners are partners 

Step 5: Form 18 is a form for converting a company to an LLP. But it must be filed with a form to the company itself. 

 Form 18 must contain the following information 

 Consent of the company’s shareholders to convert it to an LLP 

 Updated  tax return 

 Latest balance sheet and annual reports filed with  MCA 

 Any court decision or  order against or against the company 

 If there is a secured interest in the company’s assets 

 In addition, if the existing shareholders are  partners of the planned LLP 

 If the ROC rejects a previous conversion request 

 Also, a list of secured creditors who have agreed to the conversion

 Statement of company accounts  verified by an independent auditor 

 Statement of the company’s shareholders 

 Step 6 – Draft LLP Agreement 

Once incorporated, the nominated partners must establish an LLP agreement that must include the following information: 

 Name of LLP 

 Names of all partners and designated partners 

 Governance Rules  

 Recommended company 

 Rights and obligations of general partners 

 Contribution form 

 Interest rate 

 Step 7:  EForm3 and EForm14 files 

Two forms namely Form 3 and Form 14 will be submitted in the next step. 

EForm3 contains data related to the LLP agreement. This form must be submitted within 30 days of  your business becoming an LLP, attach the LLP agreement to the form.  

EForm14 is used to notify the commercial register that the company has been converted to a limited liability company. This form must be submitted within 15 days of conversion. Finally, in addition to Form 14, you need to enclose the following documents: 

  •  A copy of the corporate establishment certificate 
  •  Copy of FiLLiPe-form

Registration certificate 

The LLP must notify the registrar that the company has been converted to an LLP within 15 days of the conversion date. The intimation must be edited on Form 14. The registrar will issue a registration certificate after completing the required procedures. If the registrar refuses the conversion, the limited liability company may appeal to the court. 

If the property is registered in the name of the company, the LLP must notify these authorities of the details of the conversion, along with the details of the LLP.