{"id":3965,"date":"2020-02-24T07:02:27","date_gmt":"2020-02-24T07:02:27","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=3965"},"modified":"2020-12-11T16:33:46","modified_gmt":"2020-12-11T11:03:46","slug":"convert-your-company-into-llp","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/convert-your-company-into-llp\/","title":{"rendered":"For Less Compliances and Low-Cost Incorporation; Convert your Company into LLP"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Any running <a href=\"https:\/\/corpbiz.io\/company-registration\"><strong>Private Limite company<\/strong><\/a> or existing unlisted <a href=\"https:\/\/corpbiz.io\/public-limited-company-registration\"><strong>public Limited Company<\/strong><\/a> can convert itself into LLP. Companies can wish to convert itself into Limited Liability Partnership due to various reasons like Ease of Conversion, Tax Benefits, and Less Statutory Compliances etc. After the enactment of the Limited Liability Partnership Act, 2008, existing companies can convert themselves into LLP. <\/p>\n\n\n\n<p>Through this blog, we will discuss the\naspects of conversion of the Company into LLP. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/convert-your-company-into-llp\/#What_is_LLP\" >What\nis LLP?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/convert-your-company-into-llp\/#What_is_the_Eligibility_Criteria_for_Conversion\" >What is the Eligibility Criteria for\nConversion?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/convert-your-company-into-llp\/#What_is_the_conversion_process_of_Company_into_LLP\" >What is the conversion process of Company into LLP?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/convert-your-company-into-llp\/#Effect_of_Conversion\" >Effect of Conversion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/convert-your-company-into-llp\/#Benefits_of_Conversion\" >Benefits of Conversion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/convert-your-company-into-llp\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_LLP\"><\/span>What\nis LLP?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Limited Liability Partnership is governed based on the <strong>Limited Liability Partnership Act, 2008<\/strong><sup><a href=\"http:\/\/www.mca.gov.in\/MinistryV2\/llpact.html\">[1]<\/a><\/sup>, which came into existence on April 1, 2008. The Act came into force to promote MSME sector, with the advantage of self-governance and Less Compliance.<\/p>\n\n\n\n<p>LLP is an alternative option for\nincorporating the corporate body, which comprises the benefit of&nbsp;both the Company and the Partnership. It\ncontains the advantage of Limited liability to partner and Flexibility of\nPartnership.<\/p>\n\n\n\n<ul><li>LLP is a corporate body having legal status same as that\nof Company.<\/li><li>Unlike the Partnership in LLP, the liability of the\npartner is limited up to the contribution made by them.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Eligibility_Criteria_for_Conversion\"><\/span>What is the Eligibility Criteria for\nConversion?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>The Company should not be carrying any collateral on any of its assets;<\/li><li>There should be no pending E- Forms&nbsp; of a company;<\/li><li>There should be no open charges for or against the Company;<\/li><li>Company\u2019s shareholder will become partners of the LLP;<\/li><li>A company processing the conversion must have filed at least one balance sheet and annual returns. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_conversion_process_of_Company_into_LLP\"><\/span>What is the conversion process of Company into LLP?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>&nbsp;Following mentioned way a private limited\ncompany can be converted into an LLP<\/em><\/strong><\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Director Identification Number&nbsp;<\/h4>\n\n\n\n<p>There must be at least two designated\npartners in LLP, and one must be an Indian Citizen. While the incorporation of\nthe LLP, partners are required to have their own DIN. DIN may also be allotted\nto a new person who is added as director\/designated partner in LLP. Further,\nthe very first step of converting the Company into LLP is the addition of a new\ndesignated partner to the Company, after this member can obtain it\u2019s DIN.\nBesides this, a member can apply for the DSC, which is required during the\nprocess of DIN application. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Meeting of the Board of Directors&nbsp;<\/h4>\n\n\n\n<p>Boards of Directors of the Company are\nrequired to call for a meeting. In this meeting, a board of resolution shall be\npassed, allowing the conversion of the Company into LLP. Board of a resolution\nshall be passed with the majority and hence filed with the MCA along with the\nnecessary forms and application.&nbsp; <\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Application for Name&nbsp;<\/h4>\n\n\n\n<p>In the next step, the Company must apply for\na name reservation, and get a certificate of name approval from the Registrar\nof Companies.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Incorporation Form&nbsp;<\/h4>\n\n\n\n<p><strong><em>Once the Company reserves its name, LLP must\nfile its incorporation along with the below-mentioned documents; <\/em><\/strong><\/p>\n\n\n\n<ul><li>Proof of LLP Office address <\/li><li>Sheets of subscription <\/li><li>Partner\u2019s consent Letter <\/li><li>Partners Identity proof <\/li><li>Resident proofs partners&nbsp;;<\/li><li>Details\nfurnishing information of other companies in which the LLP\u2019s partners work as\npartners.<strong><\/strong><\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">Application for Conversion into LLP<\/h4>\n\n\n\n<p>For converting the existing Company into LLP, Form 18 must be duly filled. the following information is required to be furnished along with the form;<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"1024\" height=\"853\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/Application-for-Conversion-into-LLP-1024x853.png\" alt=\"    Application for Conversion into LLP\" class=\"wp-image-4003\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/Application-for-Conversion-into-LLP-1024x853.png 1024w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/Application-for-Conversion-into-LLP-300x250.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/Application-for-Conversion-into-LLP-768x640.png 768w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/Application-for-Conversion-into-LLP.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n\n<ul><li>Consent of the Company\u2019s shareholders;<\/li><li>Recent ITR ;<\/li><li>Recent annual returns and&nbsp; balance sheet ;<\/li><li>Any court order against the Company;<\/li><li>If any Court order is &nbsp;present against or for Company <\/li><li>If Company is still holding any security\ninterest in the Company\u2019s assets.<\/li><li>Details if, ROC has ever rejected conversion\napplication of the Company. <\/li><li>List of secured creditors and their consent<\/li><li>Statement of accounts via an independent\nauditor&nbsp;<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">Incorporation&nbsp;Certificate<\/h4>\n\n\n\n<p>After completing all the formalities, ROC\nwill further issue the Certificate of Incorporation to LLP. Hence, the Company shall\nbe registered as LLP.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Drafting an LLP Agreement<\/h4>\n\n\n\n<p><em><strong>After the incorporation, the designated partners must develop an LLP agreement, providing the following information<\/strong><\/em><strong>:<\/strong><\/p>\n\n\n\n<ul><li>LLP\u2019s Name<\/li><li>Name of all Partners and Designated Partners&nbsp;<\/li><li>Rules of governance<\/li><li>Proposed Business<\/li><li>Rights and Duties of Partners&nbsp;&nbsp;<\/li><li>Form of contribution&nbsp;<\/li><li>Profit-Sharing ratio&nbsp;<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">E-Form-3 and E-Form-14<\/h4>\n\n\n\n<p>Form -3 provides the information of LLP\nagreement. The form should be filed within a period of 30 days of such\nconversion, duly attached with the agreement. Further, form \u2013 15 is required to\nbe filed by the partners within 15 days of period of the conversion. Beside Form-14,\nfollowing documents must be attached:&nbsp;<\/p>\n\n\n\n<ul><li>Incorporation Certificate<\/li><li>Copy of E-Form FiLLiP<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/corpbiz.io\/llp-registration\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/LLP-Registration-Corpbiz.png\" alt=\"LLP Registration\"><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Effect_of_Conversion\"><\/span>Effect of Conversion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>Some of the effects of conversion of Company into LLP is;<\/strong><\/em><\/p>\n\n\n\n<ul><li>The private Company gets dissolved\nafter conversion.&nbsp;<\/li><li>Registrar of Company will remove\nthe name of the private limited Company from the register. <\/li><li>Conversion does not affect\nemployment, present liability, obligation, agreements and contracts.<\/li><\/ul>\n\n\n\n<p>Company must inform all the concerned authorities about the\nconversion. In addition to this, shall make necessary changes in all the\nregistrations and licenses.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits_of_Conversion\"><\/span>Benefits of Conversion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>On\nconversion of Company into LLP, assets of the Company will be converted into\nLLP. There is no requirement of instrument transfer. Hence, no stamp duty\nimplication is required for such transfer. <\/li><li>After\nconversion, no limit will be implied on partners. <\/li><li>After\nconversion into LLP, no requirement on holding a minimum number of meeting and\nmaintaining statutory records is required.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to above discussions, LLP is considered to be a more convenient form of organization. For many entrepreneurs and professionals, LLP is eaten most suitable form for the incorporation, as it has less burden of compliances. Through conversion of existing Company into LLP, it can retain the advantages of Limited Liability and of less compliance.<\/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\/the-role-of-the-company-secretary\/\">\nFunctions of a Company Secretary as per the Companies Act, 2013<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Any running Private Limite company or existing unlisted public Limited Company can convert itself into LLP. Companies can wish to convert itself into Limited Liability Partnership due to various reasons like Ease of Conversion, Tax Benefits, and Less Statutory Compliances etc. After the enactment of the Limited Liability Partnership Act, 2008, existing companies can convert [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":3966,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[120,340],"tags":[351],"acf":{"service_id":"321"},"authorName":"Shailza Sharma","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2019\/10\/IMG-20190927-WA0001-150x150-22.jpg","authorDescription":"Miss Shailza Sharma, BA. LLB graduate from Himachal Pradesh University. She holds an experience of 2.5 years in various Legal companies and organizations.","postViews":7255,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/3965"}],"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\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=3965"}],"version-history":[{"count":29,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/3965\/revisions"}],"predecessor-version":[{"id":21692,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/3965\/revisions\/21692"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/3966"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=3965"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=3965"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=3965"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}