{"id":43177,"date":"2022-05-10T14:42:51","date_gmt":"2022-05-10T09:12:51","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=43177"},"modified":"2022-05-10T14:42:53","modified_gmt":"2022-05-10T09:12:53","slug":"partnership-to-llp-conversion-key-legalities","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/partnership-to-llp-conversion-key-legalities\/","title":{"rendered":"Partnership to LLP conversion: Key Legalities Explained"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The\nshift from conventional partnership firms to LLP has increased lately. This\nsurge is credited to the flexible constitutional framework of LLP.<\/p>\n\n\n\n<p>Unlike\npartnership firms, LLP involves minimal compliance requirements and has\nperpetual existence. Also, the threshold of liabilities for the LLP\u2019s partners\nis limited to their contribution. <\/p>\n\n\n\n<p>Generally,\nLLP is perceived as a hybrid of both a private limited company and a\npartnership firm. This form of business structure is ideal for small and\nmedium-sized businesses. A partnership firm, on the contrary, is difficult to\nmanage when it comes to stability. Also, the maximum number of partners in a\nPartnership Firm is 100, as compared to an LLP, which can hold unlimited number\nof partners. This blog will explore the legalities of the Partnership to LLP\nconversion in detail.<\/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\/partnership-to-llp-conversion-key-legalities\/#Partnership_firm_Vs_LLP\" >Partnership firm Vs. 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\/partnership-to-llp-conversion-key-legalities\/#Advantages_of_switching_to_the_LLP_business_structure\" >Advantages of switching to the LLP business structure<\/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\/partnership-to-llp-conversion-key-legalities\/#Conditions_for_Partnership_to_LLP_conversion\" >Conditions for Partnership to LLP conversion<\/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\/partnership-to-llp-conversion-key-legalities\/#Procedure_for_Partnership_to_LLP_conversion\" >Procedure for Partnership to LLP 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\/partnership-to-llp-conversion-key-legalities\/#Effect_of_Partnership_to_LLP_conversion\" >Effect of Partnership to LLP 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\/partnership-to-llp-conversion-key-legalities\/#Liabilities_of_partners_before_conversion\" >Liabilities of partners before conversion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/partnership-to-llp-conversion-key-legalities\/#Conversion_Notice\" >Conversion Notice<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/partnership-to-llp-conversion-key-legalities\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Partnership_firm_Vs_LLP\"><\/span>Partnership firm Vs. LLP<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>LLP has leverage to operate as an independent legal entity, unlike partnership firm.<\/li><li>Contrary to LLP, the personal assets of the members in a partnership firm are always at risk due to unlimited liability.<\/li><li>The prevailing legislation mandates LLPs to maintain a book of an account which otherwise is not compulsory for the partnership firm.<\/li><li>A DSC is not required in case of a Partnership Firm, unlike an LLP.<\/li><li>DSC (Digital Signature Certificate) is mandatory for <a href=\"https:\/\/corpbiz.io\/llp-registration\"><strong>LLP Registration<\/strong><\/a> under the LLP Act, 2008.<\/li><li>There is a limit under the Partnership Act 1932 on how many members can be a part of a partnership firm. On the other hand, LLP does not face such kind of legal constraint.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_switching_to_the_LLP_business_structure\"><\/span>Advantages of switching to the LLP business structure<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Following\nare the common advantages of Partnership to LLP conversion: <\/em><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Flexibility and Ease of Management<\/h3>\n\n\n\n<p>The LLP\nbusiness structure offers increased flexibility to the serving partners when it\ncomes to addressing daily operations. Such business structures fall under the\nLimited Liability Partnership Act, 2008, promoting flexible governance and ease\nof management.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Perpetual Succession<\/h3>\n\n\n\n<p>Unlike\na conventional partnership, LLP remains unaffected by events like apartner&#8217;s\ndemise. LLP can withstand adverse scenarios more effectively than partnership\nfirms.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Investment opportunities<\/h3>\n\n\n\n<p>The\nrobust corporate structure of LLP attracts ample investment opportunities as\nopposed to traditional partnerships.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conditions_for_Partnership_to_LLP_conversion\"><\/span>Conditions for Partnership to LLP conversion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>The norms around the Partnership to LLP conversion are cited under Section 55 of the <strong>LLP Act, 2008<\/strong><sup><a href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/acts-rules\/llp-act-2008.html\"><strong>[1]<\/strong><\/a><\/sup><strong>,<\/strong> read with the Schedule II of the Act.<\/li><li>Any changes in the management of the partnership firm during the application filing are unacceptable for the conversion purpose. Any alternation to the management can occur after the conversion.<\/li><li>It is a mandate for all serving partners to secure Digital Signature Certificate, DPIN\/DIN meet conversion legalities.<\/li><li>The partnership firm must fall under the Partnership Act, 1932.<\/li><li>Consent of all serving partners is also essential in this regard.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_for_Partnership_to_LLP_conversion\"><\/span>Procedure for Partnership to LLP conversion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nsection below entails the procedure for Partnership to LLP conversion: <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 1: Name Approval and Digital Signature Certificate<\/h3>\n\n\n\n<p>Name\napproval of the proposed business is the first step in the conversion process.\nFor this, the applicant firm needs to file an online application with the\nlicensing authority. For additional registration formalities, the Designated\nPartners must hold Digital Signature Certificates. DSCs are required to\nvalidate e-forms and various other documents electronically.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 2 \u2013Form filing with the RoC<\/h3>\n\n\n\n<p>File\nForm 17 (application pertaining to the Partnership to LLP conversion) with RoC.\nIt must enclose the following details;<\/p>\n\n\n\n<ul><li>Service\nRequest Number generated against the RUN \u2013 LLP form.<\/li><li>Proposed\nLLP&#8217;s name<\/li><li>Name,\naddress, and registration particulars of the firm<\/li><li>Particulars\nsuch as no. of partners and capital contribution<\/li><li>Creditors\ndetails<\/li><\/ul>\n\n\n\n<p><strong><em>The\nsaid form must be attached with the following attachments; <\/em><\/strong><\/p>\n\n\n\n<ul><li>Statement\nof partners reflecting their confirmation for Partnership to LLP conversion<\/li><li>Firm&#8217;s\nfinancial information validated by the Chartered Accountant<\/li><li>Copy of\nthe latest IT return receipt<\/li><li>List of\nall the secured creditors and their permission<\/li><li>Any other required dossiers<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Step 3: File incorporation form FiLLiP<\/h3>\n\n\n\n<p>The\napplication form must accompany the following;<\/p>\n\n\n\n<ul><li>Details of the RUN \u2013 LLP (it will be\nauto-populated)<\/li><li>Address of registered office and email contact\nof the LLP<\/li><li>Registrar&#8217;s office<\/li><li>Nature of business undertakings<\/li><li>Details pertaining to partners, designated\npartners, their DPINs, DINs, and PANs<\/li><li>Sum of partners&#8217; contribution to the firm<\/li><li>The duly filled FiLLiP form must carry the\nfollowing attachments:<\/li><li>Address proof relating to the LLP&#8217;s registered\noffice<\/li><li>Subscriber&#8217;s consent<\/li><li>NOC issued by the premises&#8217; owner along with a\ncopy of utility bills which should be the latest ones<\/li><li>Consent of any licensing authority<\/li><li>Details of any company where partner(s)\nconcerned are serving the designation of director\/partner.<\/li><li>Proof relating to the address and identity of\nthe applicant<\/li><li>Where the name of the LLP is similar to any\nprevailing LLP\/firm, a NOC from the latter or a copy of the board resolution is\nmandatory.<\/li><\/ul>\n\n\n\n<p>The\nsaid forms must enclose the signature of the proposed designated partners and\nbe validated by a CS, CA, or a Chartered Accountant. The fee for such\nregistration differs in accordance with the amount of capital contribution.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 4\u2013 Issuance of Certificate of Registration<\/h3>\n\n\n\n<p>The\nRoCissues the registration certificate of the LLP after successful document\nvetting.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 5 \u2013 Furnish LLP Agreement<\/h3>\n\n\n\n<p>The LLP\nAgreement must be furnished in Form LLP-3 within thirty days from the date of\nincorporation. It mustenclose the following details.<\/p>\n\n\n\n<ul><li>LLP&#8217;s\nname<\/li><li>Designated\npartners&#8217; name<\/li><li>Form of\ncapital contribution as well as the profit-sharing ratios<\/li><li>Provisions\nthat regulate the LLP<\/li><li>Rights\nand obligations of the designated partners<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Step 5 \u2013 Intimation to the Registrar<\/h3>\n\n\n\n<p>The\nRegistrar of Firms must be notified about the Partnership to LLP conversion and\nother details within fifteen days from the incorporation date via form-14. The\napplication form must carry;<\/p>\n\n\n\n<ul><li>Copy of certificate of incorporation <\/li><li>a copy of the documents attached with the Form FiLLiP.<\/li><\/ul>\n\n\n\n<p>This\nbrings to an end the procedure relating to the Partnership to LLP conversion.\nIt is worth noting that old permits and licenses issued to the partnership firm\nwould not remain effective post successful conversion.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Effect_of_Partnership_to_LLP_conversion\"><\/span>Effect of Partnership to LLP conversion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>An LLP\ncannot use a name other than listed in the registration certificate.<\/li><li>All the\nfinances, privileges, and rights vested in the firm must be transferred to the\nLLP.<\/li><li>The\nfirm shall not remain operational under the Indian Partnership Act 1932. Its\ncredentials shall be discarded from the records in place.<\/li><li>The\npending cases would be shifted to LLP after completing the procedure of\nPartnership to LLP conversion. The same is true for previous judgement or\norders either in favour or against the firm.<\/li><li>All prevailing agreements and contracts shall\ncontinue to remain in effect with the LLP as the party.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Liabilities_of_partners_before_conversion\"><\/span>Liabilities of partners before conversion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Every\npartner will be collectively accountable for all the firm&#8217;s obligations, be it\nrelated to finances or other subject matters. If any partner discharges the\nobligation, then he\/she shall be compensated by the LLP.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conversion_Notice\"><\/span>Conversion Notice<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Post\nconversion every LLP is mandated to draft a notice relating to the conversion.\nThe said notice should enclose key details including; <\/p>\n\n\n\n<ul><li>Date of conversion<\/li><li>Incorporation number of the firm<\/li><\/ul>\n\n\n\n<p>This\nnotice shall help LLP to address event-based compliances in future. According\nto the LLP Act, 2008, the said requirement should be met within 12 months\nperiod. This timeline would come to effect post 14 days from the incorporation\ndate. <\/p>\n\n\n\n<p>Failure\nto meet this condition shall attract the penalty ranging from Rs 10000-Rs\n100000 for the defaulting company. In the event of a continuing violation, the\nminimum penalty of Rs 50\/day, and maximum of Rs 500\/day shall be imposed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Partnership\nto LLP conversion is a tedious and complicated procedure that involves a lot of\npaperwork. In case you are not comfortable with meeting the above conversion\nrequisites, then hire a professional for such a purpose. At Corpbiz, our\nprofessionals can handle the legalities on your behalf and achieve the desired\nconversion in a hassle-free manner.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The shift from conventional partnership firms to LLP has increased lately. This surge is credited to the flexible constitutional framework of LLP. Unlike partnership firms, LLP involves minimal compliance requirements and has perpetual existence. Also, the threshold of liabilities for the LLP\u2019s partners is limited to their contribution. Generally, LLP is perceived as a hybrid [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":43180,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[337],"tags":[2332],"acf":{"service_id":"41"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":2734,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/43177"}],"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\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=43177"}],"version-history":[{"count":10,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/43177\/revisions"}],"predecessor-version":[{"id":43188,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/43177\/revisions\/43188"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/43180"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=43177"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=43177"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=43177"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}