{"id":28434,"date":"2021-04-01T12:54:22","date_gmt":"2021-04-01T07:24:22","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=28434"},"modified":"2024-12-26T17:57:04","modified_gmt":"2024-12-26T12:27:04","slug":"conversion-of-partnership-firm-into-limited-liability-partnership","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/conversion-of-partnership-firm-into-limited-liability-partnership\/","title":{"rendered":"Conversion of Partnership firm into Limited Liability Partnership"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In\nrecent years, there is an emerging trend for conversion of partnership firm to\nLimited Liability Partnership (LLP). The conversion of partnership firm into a Limited\nLiability Partnership is done in accordance with the provisions of Section 55\nof the LLP Act, 2008 which is read with&nbsp;2<sup>nd<\/sup> Schedule.<\/p>\n\n\n\n<p>The\nLLP\u2019s was introduced through the Limited Liability Partnership Act, 2008 and\nthe LLPs were made the foremost choice for medium and small sized businesses. One\nof the major reasons behind the conversion of Partnership firm into Limited\nLiability Partnership is because the LLPs are more flexible, separate legal\nentity, provides limited liability protection to partners, can have unlimited\npartners and provides ease in ownership transfer.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Eligibility Criteria for Conversion\nof Partnership Firm<\/h3>\n\n\n\n<p>The pressure on the personal assets of the partner is less as in comparison with the <a href=\"https:\/\/corpbiz.io\/partnership-firm-registration\" title=\"Partnership Firm Registration\"><strong>partnership firm<\/strong><\/a>. As the LLPs are the hybrid of both a partnership and a <strong><a href=\"https:\/\/corpbiz.io\/company-registration\" title=\"Private Limited Company Registration\">private limited company<\/a><\/strong> it offers many such advantages. But the real objective behind the conversion of partnership firm into LLP is due to the fact that LLPs offer a major advantage to the small and medium-sized businesses and suits their organisation requirements very well.<\/p>\n\n\n\n<p>The main eligibility\nrequirement for conversion of partnership firm into LLP is that:<\/p>\n\n\n\n<ul>\n<li>Every partner of the partnership firm will shift to be the partner of LLP and<\/li>\n\n\n\n<li>No other person except these partners of firm will be the partner of LLP.<\/li>\n\n\n\n<li>It is compulsory for all the partners to have a valid <strong><a href=\"https:\/\/corpbiz.io\/dsc-registration\" title=\"DSC Registration\">Digital Signature Certificate<\/a><\/strong> (DSC) and at least two partners must have a DPIN before making such an application.<\/li>\n\n\n\n<li>The registration of all the partners must be under <strong>Indian Partnership Act, 1932<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/The_Indian_Partnership_Act,_1932\"><strong>[1]<\/strong><\/a><\/sup>.<\/li>\n\n\n\n<li>For conversion of the partnership firm into LLP the consent of all the partners should be obtained.<\/li>\n\n\n\n<li>Any partner who wishes to be added or removed from the LLP can be so allowed only after the conversion of partnership firm in to LLP.<\/li>\n\n\n\n<li><strong><a href=\"https:\/\/corpbiz.io\/din-under-mca\" title=\"Director Identification Number\">Director Identification Number<\/a><\/strong> (DIN) or the Designated Partner Identification Number (DPIN) should be there for all Designated Partners.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Basic Requirement for\nConversion of Partnership Firm into LLP<\/h3>\n\n\n\n<p>&nbsp;The basic requirement which shall be mandated by the\npartners before conversion of partnership firm into LLP is given below:-<\/p>\n\n\n\n<ul>\n<li>Upto date <strong><a href=\"https:\/\/corpbiz.io\/income-tax-return-filing\" title=\"Income Tax Return Filing\">filing of Income tax returns<\/a><\/strong><\/li>\n\n\n\n<li>Consent of unsecured creditors for conversion<\/li>\n\n\n\n<li>Minimum 2 Designated Partners<\/li>\n\n\n\n<li>Atleast 1 designated partners shall be an Indian Resident<\/li>\n\n\n\n<li>The Partners and Designated Partners can be same person<\/li>\n\n\n\n<li>Contribution of share capital from partner<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Procedure of Conversion of Partnership Firm to LLP<\/h3>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"998\" height=\"585\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/04\/Procedure-of-Conversion-of-Partnership-Firm-to-LLP.png\" alt=\"Procedure of Conversion of Partnership Firm to LLP\" class=\"wp-image-28435\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/04\/Procedure-of-Conversion-of-Partnership-Firm-to-LLP.png 998w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/04\/Procedure-of-Conversion-of-Partnership-Firm-to-LLP-300x176.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/04\/Procedure-of-Conversion-of-Partnership-Firm-to-LLP-768x450.png 768w\" sizes=\"(max-width: 998px) 100vw, 998px\" \/><\/figure><\/div>\n\n\n<h3 class=\"wp-block-heading\">Apply for DIN<\/h3>\n\n\n\n<ul>\n<li>In case of two designated partners \u2013 DIN can be obtained\ntogether with the Incorporation form (FiLLip)<\/li>\n\n\n\n<li>In case where there are more than two designated partners \u2013\nDIN should be obtained for all other designated partners.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Name Approval and\nDigital Signature Certificate <\/h3>\n\n\n\n<p>The partners will have to\nregister on the \u201cRUN-LLP\u201d option on the MCA portal wherein the partners shall\nregister and reserve their unique name. They shall apply for \u201cConversion of\npartnership firm to LLP\u201d and shall submit the required documents by giving the\nfee amount. <\/p>\n\n\n\n<p>It is mandatory for all the\npartners of the LLP to possess their own digital signature certificates which\nshall be affixed in the relevant forms.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Filing of Form with ROC\n<\/h3>\n\n\n\n<p>The given below are few of\nthe forms which are required to be filed with ROC along with the attachments\nfor conversion of partnership firm into LLP. <\/p>\n\n\n\n<ul>\n<li><strong><em>Form -17<\/em><\/strong>:-The conversion application is required to be file by the partners\nunder Form-17 with the few attachments like statement of consent of all the\npartners, consent of all the unsecured creditors, statement of all the assets\nand liabilities of Company, Designated Partners declaration of Part B of Form\n17 and acknowledgement copy of the latest filing of Income Tax Return.<\/li>\n\n\n\n<li><strong><em>Form- FiLLiP<\/em><\/strong> : This form shall be accompanied by attaching documents like proof\nof office address (rent agreement), NOC from property owner, Copy of the\nutility bills, full contact details of all the partners with DSC &amp; DIN&nbsp; and Form -9 that is a consent to act as designated\npartners.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Issue of Certificate of\nRegistration of LLP<\/h3>\n\n\n\n<p>The Registrar\nunder Section 58(1) of the LLP Act on getting\nsatisfied that a firm has obliged with the provision of the Second Schedule\nshall in accordance with the provisions of the LLP Act and the rules, register\nthe submitted documents and issue a certificate of registration. <\/p>\n\n\n\n<p>Rule 32 (1) of the LLP Rules deals with the issuance of registration\ncertificate by the Registrar on conversion of partnership firm into a LLP under\nhis seal in Form- 19.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Draft of LLP Agreement<\/h3>\n\n\n\n<p>&nbsp;&nbsp;&nbsp;&nbsp; The contents of LLP shall contain:-<\/p>\n\n\n\n<ul>\n<li>Name of the LLP<\/li>\n\n\n\n<li>Name of the Partners &amp;\nDesignated Partners<\/li>\n\n\n\n<li>Rights &amp; Duties of all the Partners<\/li>\n\n\n\n<li>Form of contribution<\/li>\n\n\n\n<li>Proposed Business description<\/li>\n\n\n\n<li>Governing Rules for the LLP<\/li>\n\n\n\n<li>Profit Sharing ratio<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Filling of e-form LLP-3\n<\/h3>\n\n\n\n<p>This form contains all the\ninformation with respect to the LLP Agreement as has been entered into between\nall the partners.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Inform the Registrar of\nFirm<\/h3>\n\n\n\n<p>Within 15 days of the date of <a href=\"https:\/\/corpbiz.io\/llp-registration\" title=\"LLP Registration in India\"><strong>LLP registration<\/strong><\/a> under the provisions of the Indian Partnership Act, 1932 shall inform the respective Registrar of Firms with which it the LLP was registered regarding the conversion of the partnership firm into LLP and the particulars of the LLP as given in Form \u2013 14 together with the following attachments:<\/p>\n\n\n\n<ul>\n<li>Copy of Incorporation Certificate\nof LLP.<\/li>\n\n\n\n<li>Copy of Incorporation documents\nsubmitted in FiLLiP.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion <\/h2>\n\n\n\n<p>The basic purpose behind\nintroducing the LLP was to provide a simple form of business and at the same\ntime provide limited liability to the partners. Taking into consideration the\nvarious benefits it is definitely worth that partners can decide the converting\ntheir existing partnership into a Limited liability partnership.<\/p>\n\n\n\n<p>Thus, in today\u2019s market competition LLPs are continually growing and sharing synergies by mergers and amalgamations with other businesses. It enjoys higher creditworthiness in comparison with the partnership firm. The flexibility in managing the business is something which has attracted many partnership firms to convert their existing firm into LLP.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/difference-between-winding-up-and-striking-off-a-company-in-india\/\">Difference between Winding up &amp; Striking off a Company in India\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In recent years, there is an emerging trend for conversion of partnership firm to Limited Liability Partnership (LLP). The conversion of partnership firm into a Limited Liability Partnership is done in accordance with the provisions of Section 55 of the LLP Act, 2008 which is read with&nbsp;2nd Schedule. The LLP\u2019s was introduced through the Limited [&hellip;]<\/p>\n","protected":false},"author":33,"featured_media":28438,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[337],"tags":[1639],"acf":{"service_id":"41"},"authorName":"Kandarp Vanita","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/image_2021_02_01T09_09_44_024Z.png","authorDescription":"Kandarp Vanita has done masters in Corporate and Commercial Law from WB National University of Juridical Sciences. She has 3 yrs of experience in drafting legal documents &amp; dissertations. Being a curious reader, she is also passionately into providing legal backups and comprehensive understandings in every aspect of Law to the firms.","postViews":6436,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/28434"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/33"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=28434"}],"version-history":[{"count":12,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/28434\/revisions"}],"predecessor-version":[{"id":68063,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/28434\/revisions\/68063"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/28438"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=28434"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=28434"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=28434"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}