Procedure for Conversion of Private Limited Company to Limited Liability Partnership (LLP)

Khushboo Sharma

Khushboo Sharma

Published on: Jul 13, 2023

Aakanksha Singhal

Updated on: Sep 5, 2023

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Introduction:

Private Company means a company which has minimum paid-up share capital as may be prescribed, and which by its articles, restricts the right to transfer its shares or limits the number of its members to two hundred or prohibits any invitation to the public to subscribe for any securities of the company.

Limited Liability Partnership (LLP) (LLP) refers to a body corporate or partnership formed and incorporated under the provisions of Limited Liability Partnership (LLP) Act, 2008.

A private limited company may convert itself into Limited Liability Partnership (LLP) by complying with the requirements set out in Schedule-III of Limited Liability Partnership (LLP) Act, 2008.

APPLICABLE PROVISIONS:

1. Section 56, 58, Schedule-III of Limited Liability Partnership (LLP) Act 2008
2. Rule 18, 39 of Limited Liability Partnership (LLP) Rules 2009
3. Section 96, 100, 117, 173 of Companies Act, 2013
4. Rule 7 of Companies (Incorporation) Rules, 2014

Mandatory Requirements (Paragraph 2 & 3 of Schedule-III):

1. All the shareholders of such private company shall become the partners of Limited Liability Partnership (LLP) upon such conversion.
2. All the assets of the company shall be charge free (no security interest) at the time of filing of application for conversion.
3. Every Designated Partner shall have a Designated Partner Identification Number (DPIN) and Digital Signature Certificate (DSC).
4. Company shall obtain a No Objection Certificate (NOC) in writing from all its members for such conversion.
5. Number of Designated Partners (DP) (including nominee of Body corporate as DP) for whom the details are being entered is at least two and at least one of them is a resident of India.
6. Name of the company being converted, and proposed name of the Limited Liability Partnership (LLP) should match.
7. Limited Liability Partnership (LLP) must be registered in the same state as the Registered office of the company which is being converted.

Procedure:

1. Convene a Meeting of the Board of Directors (As per Section 173 & SS-1):
   The company shall convene a meeting of its Board of Directors to pass a Board resolution to approve and authorize the following:
   • Resolution for conversion of such private limited company into Limited Liability Partnership (LLP)
   • Resolution to authorize any director or any other concerned official to make an application for reservation of name of Limited Liability Partnership (LLP) upon conversion
   Refer to the Procedure for Conducting Board Meeting for a detailed procedure.
2. Convene General Meeting (Section 96, 100 and Secretarial Standard (SS-2)):
   The company shall convene a meeting of its members to pass a special resolution to approve and authorize the conversion of such Private Limited Company into Limited Liability Partnership (LLP). Refer to the Procedure for Conducting Extraordinary General Meeting (EGM) for a detailed procedure.
3. Filing of Form MGT-14 with ROC (Section 117 and Rule 7(3)):
   The Company shall file a copy of the Board Resolution and Special Resolution passed in its duly convened Board meeting and General meeting in form MGT-14 within 30 days of passing such resolution along with the requisite documents and the fees, with the Registrar of Companies (ROC).
4. Name Reservation for LLP (Rule 18):
   
   • Applicant company shall apply for reservation of its name as a Limited Liability Partnership (LLP) in Form RUN-LLP along with stipulated fee and its board resolution to the Registrar and choose “Conversion of Private Limited Company into LLP” option from the dropdown list.
   • A maximum of 06 names can be provided for name reservation for the proposed Limited Liability Partnership (LLP).
   • In case the name includes banking, insurance, venture capital, mutual fund, stock exchange, Chartered Accountant, Company Secretary, Cost Accountant, Advocate, etc. a copy of in- principle approval from such regulatory authority or council governing concerned profession should also be attached with Form RUN LLP at the time of incorporation of such Limited Liability Partnership (LLP).
   • Registrar may if satisfied reserve the name for a period of 3 months from the intimation date by Registrar.
   Note:
   The name of the proposed Limited Liability Partnership (LLP) shall be such which is not prohibited under the Emblems and Names (Prevention of Improper Use) Act, 1950.
5. Filing of Application for Registration (Paragraph 3 of Schedule-III & Rule 39):
   After receipt of the approval on the proposed name of the Limited Liability Partnership (LLP), an application for conversion of such Private Limited Company into LLP shall be filed Form – FiLLiP along with the following attachments and the fee as may be applicable:
   • RUN – LLP form Service Request Number (SRN)
   • Consent of all shareholders for conversion
   • Copy of Board Resolution
   • Statement of shareholders
   • Approval of the owner of the registered trademark or the applicant of such trade mark for which application for registration is pending, if any
   • Approval copy, where the proposed name contains any word(s) or expression(s) which requires approval from Central Government
   • In-principle approval of regulatory authority, if required
   • Approval copy from the competent authority in case of collaboration and connection with the foreign country or place
   • Name and Registration Certificate of Company issued by the Registrar of Companies
   • Proof of Office address along with No-Objection Certificate, if applicable (Conveyance/ Lease deed/Rent Agreement along with rent receipts) along with copy of the utility bills (not older than two months)
   • Copy of the proof of identity and proof of address of the Designated Partners
   • Copy of resolution on the letterhead of the body corporate intending to become a partner in the proposed LLP and a copy of resolution/ authorization of such body corporate also on a letterhead mentioning the name and address of an individual nominated to act as nominee/designated partner on its behalf
   • Consent from partner/ Designated Partner/ nominee/ nominee of the Limited Liability Partnership (LLP) to act in such capacity
   • Statement of Assets and Liabilities of the company duly certified as true and correct by the auditor
   • List of all the secured creditors along with their consent to the conversion
   • Copy of acknowledgement of latest income tax return.
   Note:
   
   1. Individuals intending to be Designated Partner but does not have a DPIN, can make an application for allotment of DPIN in such Form FiLLiP. However, such DPIN allotment application can be made for only five individuals. In case, there are more than five partners willing to be Designated Partner in the LLP, then an application in Form DIR-3 can be filed for obtaining DPIN after such incorporation/ conversion.
   2. The applicant company shall have the option to make a name reservation application through Form FiLLiP itself.
   3. The user has an option to file Form 9 as a pdf attachment to Form FiLLiP in cases where the Designated Partners do not have DPIN or for the ones who have applied for DPIN through FiLLiP. For other Designated Partners having DPIN, the user will have an option to file Form 9 via linked filing to Form FiLLiP.
   4. The Ministry of Corporate Affairs (MCA) vide the Limited Liability Partnership (LLP) (Second Amendment) Rules, 2018 dated: 18.09.2018 has notified that Form 18 for the purposes of conversion of private/ public company into LLP is now a webform and shall be filed along with Form FiLLiP (Incorporation form) with the Central Registration Centre (CRC).
   5. Details of 500 partners/ Designated Partners (DP) can be filed through Form FiLLiP and in case of details of more than 500 DP/Partners is required to be filed, then the same can be attached to the form as an excel sheet by way of optional attachment.
6. Certificate from Registrar (Paragraph 4 of Schedule-III & Rule 39):
   After verification of the application and documents so furnished, the Registrar shall register such documents and issue a certificate of registration in Form 19 to the respective Limited Liability Partnership (LLP).
7. Inform the Concerned Registrar of Companies about Conversion of Company (Proviso of Paragraph 4 of Schedule-III & Rule 39(3)):
   The Limited Liability Partnership (LLP) shall file an intimation about its conversion to the Registrar of Companies in Form-14 along with the below-stated attachments, within fifteen days from the date of its registration:
   • Copy of Certificate of Incorporation of LLP
   • Copy of Incorporation documents submitted
   • Any other documents, if required.
8. Filing of LLP agreement (Form-3):
   The Limited Liability Partnership (LLP) shall file Form 3 in respect of the LLP Agreement so executed, with the Registrar within 30 days from the date of conversion of such conversion along with the stipulated fee and the following documents:
   • Initial LLP agreement or Supplementary/ amended LLP agreement containing changes/li>
   • Any other information as is necessary.
9. Post Conversion Compliances (Paragraph 6 of Schedule-III & Section 58):
   
   • Limited Liability Partnership (LLP) shall have a bank account opened in its name for the purposes of routine business transactions.
   • Limited Liability Partnership (LLP) shall also apply for obtaining registrations under the Goods and Services Tax Act, Micro, Small, and Medium Enterprises Act and other registrations as may be applicable to their business or file conversion application to other authorities such as Goods and Services Act, EPF, ESI, Other Specific Laws, as the case may be.
   • All tangible (movable and immovable) property as well as intangible property vested in the company, all assets, interests, rights, privileges, liabilities, obligations relating to the company and the whole of the undertaking of the company shall be transferred to and shall vest in the Limited Liability Partnership (LLP) without further assurance, act or deed.