Conversion of Limited Liability Partnership (LLP) into Private Limited Company By CS Shaffy Mehta

LLP form of business is choosen by the startups when they just need limited liability in the business and want to save the annual expense, audit expenses and incorporation charges. But while expanding the business, the existing structure i.e. LLP may act as hindrance in growth. So the same entrepreneurs at some point have a requirement to convert to a private limited company due to various reasons. Therefore, in this article, we look at whether a LLP can be converted into a private limited company.

Earlier there were no provisions under Companies Act, 1956 & 2013 regarding Conversion of Limited Liability Partnership into Company. Ministry of Corporate Affairs (MCA) has notified Companies (Authorized to Register) Amendment Rules, 2018, which come into effect from 15th August, 2018.

In these rules MCA allow other business entities with less than seven members to convert them into Private Limited Company.

Previously before this rule, the Companies (as defined under Section 366 of Companies Act, 2013) which has less than 7 members can’t be convert into Private Limited Company. But now Companies with two or more members can convert into Private Limited Company.

Kindly note that LLP Act, 2008 does not cover the conversion of LLP into Company but in Companies Act, 2013 conversion of LLP into Company is covered in section 366.

Procedure for Conversion of LLP into Private Limited Company

  1. Hold a meeting of partners to take the consent from majority of partners to convert the LLP into Private Limited Company.

  2. Take written consent or No Objection Certificate from all the secured creditors of the LLP.

  3. Apply for issuance of No objection certificate from the concerned SDM having jurisdiction.

  4. Apply for the name availability of Company in Spice+ Part A.

  5. Publish advertisement in Form URC-2 in an English newspaper and in any vernacular language newspaper (seeking objections, if any within 21 days from publication) circulating in the district in which LLP situated after reservation of name.

  6. On obtaining the name approval from ROC and publication of advertisement in Form URC-2 file the following forms along with the attach documents in 20 days.

Form and Documents which are required to be filed with ROC for Conversion of LLP into Private Limited Company

E-Form URC-1

Company required filing of Form URC-1 along with the following documents:
  1. List showing the names, addresses, and occupations of all persons named therein as partners with details of shares held by them respectively.

  2. List showing the particulars of persons proposed as the first directors of the company

  3. List of interests in other firm or body corporate of all the proposed directors of the Company.

  4. Written consent or No Objection Certificate from all the secured creditors of the LLP

  5. Written consent from all the of partners of LLP

  6. An undertaking that the proposed directors shall comply with the requirements of the Indian Stamp Act, 1899 (2 of 1899) as applicable

  7. A copy of the latest income tax return of the Limited Liability Partnership

  8. Copy of LLP Agreement (Original and all amended)

  9. A statement of assets and liabilities of the Limited Liability Partnership duly certified by a chartered accountant in practice which is made as on a date not earlier than thirty days of the filing of form no. URC-1

  10. Certificate from a CA/CS/CWA certifying the compliance with all the provisions of Stamp Act, to the extent applicable

  11. Copy of Newspaper advertisement (Form URC-2)

  12. No objection certificate from the concerned Registrar of Firms or Registrar of Companies (LLP)

Web Form Spice+ Part B (INC-32), eMoA (INC-33) & eAoA (INC-34)

Company required filing web based form Spice+ Part B, eMoA & eAoA, AGILE-PRO along with URC-1 as linked form with all the attachment as required in normal Incorporation of Company like:

  1. MOA & AOA

  2. INC-9

  3. DIR-2

  4. Identity proof and Address Proof of all Proposed Directors

  5. Proof of Registered office Address of the Company

Registrar shall within 30 days from filing the form, decide whether registration will be granted or not. If ROC satisfied with the documents presented then may issue Certificate of Incorporation (COI) in form INC-11.
E-Form INC-20A

After obtaining Certificate of Incorporation (COI) of the Company from the ROC, the Company required to file e-form INC-20A (Declaration for commencement of business) within 180 days of obtaining COI with the following attachment:
  1. Bank statement of company having all credit entries for receipt of subscription money received from all subscribers to MOA.

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