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    Conversion of Private Company to Limited Liability Partnership

    LLPs are preferred form of business as it is an alternative corporate business vehicle that provides the benefits of limited liability of a company and allows its members the flexibility of organizing their internal management on the basis of a mutually arrived agreement. LLP structure offers the benefits of both – a partnership and a company. LLP is governed by the LLP Agreement executed by the Partners. It has lesser compliance requirements and it is easier to operate. The conversion of Private limited to LLP must be followed by the approval of the Ministry by the online application providing necessary documents.

    Advantages of converting Private Company to Limited Liability Partnership

    Flexibility in running business

    The partners are given a reasonable level of flexibility in conducting the operations and running the day to day affairs of the LLP

    Limited Liability

    The liability of Partners is limited to the extent of capital contribution agreed by the partners in the LLP Agreement. One partner is not responsible or liable for another partner’s misconduct or negligence.

    LLP Agreement

    The LLP functioned according to LLP Agreement. It’s Partner who decides function and divide the duties and responsibilities.

    Capital

    Raising Capital is easier in the LLP structure as it allows a limited partner to participate without taking on any accountability.

    Financial Returns

    Various Financial Returns to the Partners from Limited Liability Partnership.

    Minimum Compliance

    An LLP is not required to maintain statutory records & registers

    Eligibility to form a Limited Liability Partnership [LLP]

    – At least Two Partners required to form an LLP

    – Legal Representative/Nominee in case of Body Corporate as Partner

    – Unique Name is required.

    – At least one Partner must be an Indian Resident.

    How we Work?

    Step 1

    Fill-up our Contact Form and Submit

    Step 2

    Our Expert/ Legal Professional will contact you and provide brief guidance into the related context

    Step 3

    All Required Documents and Details to be provided as discussed with our Expert

    Step 4

    Once all required documents are received, Our Expert will prepare and verify your application.

    Step 5

    Application for Name Reservation for LLP.

    Step 6

    Drafting the incorporation document and Filing LLP Form 18 application for conversion into LLP

    Step 7

    Drafting of LLP Agreement, with conversion clause and Payment of Stamp Duty

    Step 8

    Once all required documents are prepared, Our Expert will file LLP Agreement with MCA.

    Documents Required for Limited Liability Partnership Registration

    Photograph

    Latest passport size photograph in jpg format of Designated Partners/ Shareholders and Nominees.

    PAN card

    PAN card copy of Designated Partners/ Shareholders and Nominees.

    Identity Proof

    Aadhaar Card/ Voter ID/ Passport/ Driving License of Designated Partners/ Shareholders and Nominees.

    Designated Partner Address Proof

    Aadhaar Card/ Voter ID/ Passport/ Driving License/ Bank Statement not older than 2 Months/ Utility Bills not older than 2 Months of Designated Partners/ Shareholders and Nominees.

    DSC

    In case not having a valid DSC, then for obtaining DSC of Designated Partners, alongwith above documents, DSC Application Form and Video Verification as per the latest guidelines of DSC issued by CCA is required.

    Office Address Proof

    Copy of Electricity bill or Sale Deed or rent agreement and latest self- attested electricity bill in case of rented accommodation not older than 2 months.

    NOC from owner

    No Objection Certificate to be obtained from the owner(s) of registered office.

    Unique Name

    Four-Five Unique names in Preference order indicating the business of the Proposed LLP.

    Business

    Description of main business activity intended to perform

    Consent

    Consent of all the directors and shareholders of the company for conversion in the given format

    NoC

    NoC from the tax authorities is required to be obtained.

    Creditors approval

    List of all the secured creditors along with their consent.- The financial statement of the previous year to be provided along with ITR filed.- Documents of Private Limited Companies like PAN card, certificate of incorporation, GST registration or any other applicable documents/registrations.

    Frequently Asked Questions

    1. What are the basic conditions for converting Private Limited Company to LLP?

    Following are the conditions for conversion:

    – All the members of the Company shall become the partners of the LLP on conversion.

    – No security interest in the assets of the company should be subsisting or in force on the date of conversion i.e. the assets are free of any encumbrance.

    – Up-to-date Income-tax return has been filed under the Income-tax Act, 1961.

    – Any clearance, approval or permission for conversion of the company into Limited Liability Partnership, if required from anybody/ authority, etc. has been obtained.

    2. What is the capital required to start a Limited Liability Partnership?

    You can start a Limited Liability Partnership with any amount of capital. There is no requirement to show proof of capital invested during the incorporation process. Partner’s contribution may consist of both tangible and/or intangible property and any other benefit to the LLP.

    3. What are the key requirements/factors for registering an LLP?

    Like all partnerships registration requires two or more individuals to be the designated partners, one partner being an Indian national. The registered place of business has to be in India.

    4. Can LLP carry on more than one business activities?

    YES, under LLP one can carry more than one business, provided, the businesses are related or are of the same nature. Unrelated activities such as fashion Designing and Accountancy cannot be carried under the same LLP. The business activities are mentioned in the agreement and must be approved from RoC.

    5. Do we need to execute any instrument for transferring the assets & liabilities on conversion of company into LLP?

    On conversion of the Company/partnership into LLP, all tangible (movable or immovable) and intangible property vested in the company, all assets, interests, rights, privileges, liabilities, obligations relating to the company/firm and the whole of the undertaking of the company shall be transferred to and vest in the Limited Liability Partnership without further assurance, act, or deed.

    6. Is Foreign Direct Investment (FDI) allowed in LLP?

    Yes, Foreign Direct Investment (FDI) is allowed in LLP under the automatic route in sectors allowed by the Foreign Investments Promotion Board (FIPB). However, Foreign Institutional Investors (Flls) and Foreign Venture Capital Investors (FVCIs) will not be permitted to invest in LLPs. LLPs will also not be permitted to avail External Commercial Borrowings (ECBs.)

    7. Can NRIs / Foreign Nationals be a Designated Partners in a LLP?

    Yes, NRIs / Foreign Nationals / Foreign Companies can hold shares of a Private Limited Company subject to Foreign Direct Investment (FDI) Guidelines.

    8. What are the annual compliance requirements for a LLP?

    LLPs are required to file an annual filing with the Registrar each year. However, if the LLP has a turnover of less than Rs. 40 lakhs and/or has a capital contribution of less than Rs. 25 lakhs, the financial statements do not have to be audited.

    9. Is an office required for starting a Limited Liability Partnership?

    An address in India where the registered office of the LLP will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received.

    10. Can a LLP be incorporated for undertaking “Not-For-Profit” activities?

    No, one of the essential requirements for setting LLP is ‘carrying on a lawful business with a view to profit’. Therefore, LLP cannot be incorporated for undertaking “Not-For-Profit” activities.

    11. What are the requirements and consequence provided in the Act in respect to the licences, permits, approvals etc. obtained by the company prior to its conversion into LLP?

    It has been provided in the Act that on conversion, any approval, permit or license issued to the Private Company under any other Act shall; subject to the provisions of such other Act under which such approval, permit or license was issued, be transferred in the name of converted entity viz. LLP. Barring some registrations like GST or which a new application needs to be filed.

    12. How to change partners in LLP?

    To effect any changes in the Limited Liability Partnership, the Partners shall pass the resolution at the meeting of Partners as required by the LLP Agreement of concerned Limited Liability Partnership. Further, the resolution shall authorize any of the existing Designated Partner to act on behalf of the LLP and its Partners. Also, the authorized partners shall also hold a valid DSC to file the application to Registrar. As soon as the partners execute the Supplement Agreement for a change of partner or their respective designation, an application shall be filed with MCA to approve the changes of a partner or the designation.

    13. What is LLP Agreement? Does it require filing with MCA?

    LLP Agreement is an agreement executed by all the designated partners and partners after LLP incorporation. The agreement prescribes all the clauses related to business; including the rights, role, duties and responsibilities of partners. The agreement must be filed within 30 days of the issue of a certificate of incorporation. Failure to which will charge an additional fee of ₹ 100 per day till the date of filing.

    14. What are the documents required for incorporation of LLP?

    Identity proof and address proof is mandatory for all the proposed Designated Partners of the LLP. PAN Card is mandatory for Indian Nationals. In addition, the landlord of the registered office premises must provide a No Objection Certificate for having the registered office in his/her premises and must submit his/her identity proof and address proof.

    15. How can I get the PAN and TAN in the name of LLP?

    The application of PAN and TAN in the name of LLP shall be applied after the issuance of Certificate of Incorporation of LLP. The physical copy of the PAN will be received at the Registered Office only after being dispatched by the Income Tax Department.

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