Introduction

When more than one person’s agree to carry some business with each other and represent their mutual understanding through a contract, binding themselves through a partnership deed such arrangement results in Partnership Firm.

However various partnership firm opts for conversion into a Limited Liability Partnership (LLP) to give their firm a statutory cover and extend corporate structure to the entity.

A partnership which got itself registered under The Limited Liability Partnership Act, 2008 provide the benefit of partnership and corporate entity as well.

What are the Features of LLP?

1. Status of body corporate: LLP is a body corporate which enjoys status of separate legal entity and perpetual succession meaning thereby partners of LLP are considered separate from LLP and partners may come and go but LLP will remains in existence.

1. Designated Partners and Partners: LLP shall have at least two designated partners who are individuals and at least one should be resident in India, Body corporates can also be members of LLP where nominee of such body corporates will be considered as designated partner.

1. LLP Agreement: All the mutual rights and liabilities of partners will be governed by LLP agreement including its objectives, duties, manner of induction and cessation, termination and other important clause.

1. Partner Status: Every Partner of LLP is agent of LLP for the purpose of carrying business of LLP

1. Liability: Partners are not held personally liable for the reason of being partners, unless they have acted without authority and breached clauses of partnership by wrongful act.

What is procedure of conversion into LLP?

Section 55 of Chapter X and second schedule of LLP Act, 2008 mentions the provisions for conversion of firm into LLP.

A partnership firm may apply to convert itself into LLP in accordance with second schedule after following below given procedure:

1. Partners to have valid class Three digital signature and DIN/DPIN.

1. Partners to prepare a LLP agreement to chalk out the management and working of LLP and to decide particulars to be included in agreement and file details for incorporation like registered office, profit sharing ratio etc.

1. Partnership Firm to apply for name in form RUN_LLP with Central Registration Centre, governed and controlled by MCA.

After approval of name apply for incorporation or DIN (if do not have DIN) of LLP in Form FiLLiP.

Alternatively, Firm can directly file form FiLLiP as it also gives option of name reservation in the form along with incorporation and DIN approval.

1. File E Form 17 for application for conversion and filing statement for conversion of a Firm into LLP

1. File E Form 3 for providing information of LLP agreement with the concern authority.

1. After approval of incorporation and Form 17, E form 14 is required to be filed for intimating the Registrar of Firms about conversion of firm into LLP

What is included in this

1. Preparation of documents
2. Filing of LLP forms
3. Drafting of LLP Agreement
4. Certificate of Incorporation
5. Laisioning with department
6. 24/7 help to assist you

FAQ’s

1. What is difference between Partnership Firm and LLP?

2. What are the benefits of conversion of Partnership firm into LLP?

Conversion into LLP gives the firm status of a separate legal entity, and it gets registered in the database of Ministry of Corporate Affairs.

LLP is a form of body corporate and gives more brand recognition and increases value in the market when compared to the image of a partnership firm in the business field.

Any investor or banks gives more preference in granting loan to a LLP in comparison to an unregistered or registered firm.

3. A firm was formed with 3 partners, while conversion can the firm add 4^th partner in LLP?

No, All partners of the Firm to become partners of LLP and no else cannot be partner at the time of application.

4. If Firm has outstanding secured loans, what will be the process for conversion?

Consent of all secured creditor is to be obtained prior to making application for conversion

5. What happens to the asset and liabilities of the firm post conversion?

All property, asset, liability, interest, rights , privileges, obligations of the Firm will be transferred to the LLP

6. How legal cases gets effected in conversion from firm to LLP?

All proceeding pending against the firm will continue against the LLP

Any conviction, order, judgment, ruling of any court, tribunal or any other authority in favour or against the Firm may be enforced by or against LLP.