Overview
Establishing a company can be an excellent approach to launch or expand a business in India. Businesses that are operating as LLPs look forward to converting their entity to a company in order to get access to capital, credibility, perpetual succession, ease of transfer of ownership, and tax benefits.
Reasons for Conversion of LLP into Company
Companies in India are governed through Companies Act, 2013, it can be incorporated as either public or private company. An LLP may decide to change its legal structure and become a Company for its feature being the very reasons. Among the most popular explanations are:
1. Limited liability: In an LLP, each partner is personally liable for the debts of the business. In a company, shareholders are only liable for the amount of their investment in the company.
2. Ease of transfer of ownership: Shares in a company can be easily transferred. However in LLPs, it is difficult to do so, as each partner must agree to the sale.
3. Credibility: A company has more legitimacy than LLP because it is a legal organisation.
4. Access to capital: Companies had various alternative to raise fund to expand their business or invest further. LLPs, on the other hand, have more restrictions on how much money they can raise.
Documents required
Rule 3, 4,5 of the Companies (Authorised of Registered) Rules, 2014 governs the process of conversion of any entities into Company
|
S. No. |
Documents |
|
1 |
Copy of Partners Resolution |
|
2 |
NOC from all creditors |
|
3 |
Copy of all LLP Agreements |
|
4 |
Copy of newspaper publication regarding conversion |
|
5 |
Affidavits and undertaking |
|
6 |
Latest ITR |
|
7 |
Copy of latest statement of accounts certified by Auditor |
|
8 |
Notice of conversion to the Registrar of Companies |
|
9 |
List of Partners and Designated partner |
|
10 |
All documents pertaining to incorporation in Spice+ |
Process of conversion
1. Approval of all Partners to be accorded for conversion of LLP into Company through partners resolution
2. Name reservation application to be filed with the Central Registration Centre and seek approval for new name in Spice+.
3. Application to the central registration centre in Spice+ along with E-MOA and E-AOA for conversion application.
4. E form URC-1 to be filed along with Spice+.
5. After approval from Central Registration Centre, the Registrar shall issue certificate of incorporation in Form INC 11.
What is included in this
- Documents preparations for conversion
- Filing of E forms at MCA portal
- Follow-up with ROC
- 24*7 Mail Support
FAQ’s
- What is LLP?
A partnership that has been officially registered under the Limited Liability Partnership Act of 2008 and whose members have agreed to carry out a certain goal as stated in the Limited Liability Partnership Agreement.
- What is LLP Agreement?
A written agreement between the partners of a limited liability partnership (LLP) is known as an LLP agreement or limited liability partnership agreement. It describes the rules and regulations that will control the LLP as well as the partners' rights and obligations.
3. What is the difference between LLP and Company?
Few differences between LLPs and companies are listed below:
|
Particular |
Limited Liability Partnership |
Private Company |
|
Act |
LLP is governed by LLP Act, 2008 |
Companies are governed by Companies Act, 2013 |
|
Primary Document |
LLP agreement |
Memorandum of Association Article of Association |
|
Name |
Name shall have word “LLP” |
Name shall have word “Private Limited Company” |
|
Minimum number of partners/ directors |
Minimum 2 Designated Partners |
Minimum 2 Directors |
|
Maximum number of partners/members |
No limit on maximum partners |
Maximum 200 members with exclusions given in definition |
|
Books of Accounts |
Within 6 months from end of financial year, prepare statement of asset & liability and shall be signed by designated partners |
Within 6 months of end of financial year, prepare Balance Sheet and Profit and loss account to be adopted by members of the Company at Annual General Meeting |
|
Annual Return |
File E Form 11 within 60 days from end of financial year |
File E Form MGT 7 within 60 days from the date of adoption of accounts at Annual General Meeting. AGM should be held prior to 30th September |
|
Statement of Accounts |
File E Form 8 within 6 months of closure of financial year |
File E form AOC 4 within 30 days from the date of adoption of accounts at Annual General Meeting AGM should be held prior to 30th September |
4. What E forms are required for conversion of Company into LLP?
Web form RUN: For name approval
Web form Spice plus
E form URC-1
5. What are the conditions of conversion?
Consent of All partners is required
Consent of secured creditor to be accorded and no objection is received from them in written.
There shall be two or more members for the purposes of registration, a company with less than seven members shall register as a private company.
6. What are the compliances after conversion?
Change in Sign Board, Letter head, stationary and other items f LLP
Application to update name in PAN.
Intimation and application to other authorities where LLP is registered i.e. GST, EPF, ESI etc.
Intimation to various suppliers and parties with whom LLP has business.
Intimation to banks where LLP is maintaining bank accounts.
7. What will be status of pending litigation if any on LLP?
As per section 370 of the Companies Act 2013, all suits and other legal proceedings taken by or against the company, which are pending at the time of the registration of LLP, will continue in name of the new company