Conversion of Company to LLP Made Easy
Seamlessly transform your company into an LLP with our compliance service. Benefit from partnership flexibility, limited liability security and individualized debt allocation.
Overview
In India, Limited Liability Partnership (LLP) are emerging as a popular business structure for their multiple advantages among small and medium scale businesses and service sector. It is simpler yet corporate form of business where in all good features of both Company and Partnership 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. Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.
Key feature of LLP
- LLP is created through a partnership agreement be signed by two or more people and it must be registered with the Registrar of Companies.
- All the mutual rights and liabilities of partners are governed by LLP agreement including its objectives, duties, manner of induction and cessation, termination and other important clause.
- Minimum two designated partners are required to form a LLP
- An LLP’s name must conclude with “limited liability partnership” or the abbreviation “LLP.”
- The amount of capital that the partners have agreed to contribute to the LLP is known as the registered capital of an LLP.
- The management of an LLP is vested in the partners
Advantages of LLP
- LLP has all the advantages of Company like limited liability, perpetual succession, separate identity, Capacity to enter into contract, Capacity to sue and be sued etc. 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 registration and other statutory compliances of LLP are very low as compared to a Company.
- The LLP has very limited compliances as compared to the Company. LLPs don’t have to maintain secretarial documents like Notices, Agenda, Minutes, Statutory Registers etc.
- Companies have to get their financial statements audited compulsorily irrespective of turnover and profit however in case of LLP there is no requirement to audit the financial statement unless the contributions of LLP exceeds Rs. 25 lakh or annual turnover exceeds Rs. 40 lakh.
- LLP offers biggest tax advantages as in case of Company, Profits and taxed twice i.e one at corporate level at Corporate Tax and another at shareholder level while distributing dividend. However, in case of LLP, profits are taxed only once at LLP level and any distribution of share of profit to partner is exempt.
Reasons for Conversion of Company into LLP
- As a result of the introduction of new corporate governance practises for Companies, regulatory agencies are gradually becoming stricter.
- LLPs provide greater managerial and decision-making flexibility than companies.
- LLPs provide their partners with limited liability protection, which means they are not personally responsible for the LLP’s debts.
- Comparatively, the statutory requirements for LLPs are less stringent than those that must be met by any company
- The income and losses of an LLP are distributed to the partners and taxed on their individual tax returns since LLPs are treated as pass-through entities for tax purposes
Documents required
S.No. | Documents |
1 | Copy of Board Resolution |
2 | Copy of Notice and Explanatory statement calling General Meeting |
3 | Copy of Unanimous Resolution passed at General Meeting |
4 | NOC from regulator if registered under any other Act |
5 | NOC from all creditors if any |
6 | LLP Agreement |
What is included in this
FAQs
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.
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.
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 ” |
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 7/7A 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 30 days from end of 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
|
- E form MGT-14: For filing special resolution passed at general meeting
- Web form RUN_LLP: For name approval
- Form FiLLiP: For LLP incorporation
- E form 18: For application of conversion
- E form 14: For information on conversion
- Eform 3: For information on LLP agreement
- All shareholders of the Company should become partners of LLP and no else cannot be partner at the time of application.
- There should be no security interest in its assets subsisting or in force at time of conversion application.
- All applicable clearances, approvals and permissions for conversion of the Company into LLP to be obtained.
- Consent of all creditors has been obtained.
- Provision with respect to submission of returns and annual accounts under Companies Act, 2013 should be complied.
- Change in Sign Board, Letter head, stationary and other items where old name as Company used to be displayed
- Application to update name in PAN.
- Intimation and application to other authorities where Company is registered i.e. GST, EPF, ESI etc.
- Intimation to various suppliers and parties with whom Company has business.
- Intimation to banks where Company is maintaining bank accounts.
Yes, there may be tax implications. It is advisable to consult with a tax professional like LegalDelight to understand the potential impact on taxes, such as income tax and capital gains tax.
The duration can vary depending on factors such as the efficiency of document preparation, government processing time, and compliance with requirements. It generally takes a few weeks to complete the conversion.
Yes, it is important to inform employees, suppliers, customers, and other stakeholders about the conversion. Provide them with updated contact information and assure them of a smooth transition.
