Lets first understand what is LLP. LLP is governed by Limited Liability Partnership Act- 2008 which came into force from April 1, 2008. It is a combination of both the Company and the Partnership Firm. It is especially suitable for small to medium-sized business enterprises. LLP is a separate legal entity having a minimum of 2 partners. There is no such limit on maximum partners. Consent of all shareholders of Private Limited Company (PLC) is to be taken in order to convert Pvt Ltd into LLP. You Can download forms for conversion from here.
Follow the detail procedure in order to convert Pvt Ltd into LLP:
The minimum number of designated partners for the incorporation of an LLP is two. One of them must be an Indian resident.
Further, it is important to apply for a DSC before applying for the DIN.
The board resolution is to be passed for Conversion of Company into LLP. And to approve any director to Apply for Name of LLP.
The company will have to apply for a reservation of the name of LLP.
And get the name Approval Certificate from ROC.
Form 18 needs to be filed with form for incorporation itself.
It needs to be filed along with following attachments:
1. Statement of the consent of shareholders (Mandatory).
2. Statement of accounts of the company certified as true and correct by the independent auditor.
3. List of all the secured creditors along with their consent.
4. Copy of acknowledgement of latest income tax return (Mandatory).
ROC will issue COI as to the conversion of LLP
Further file E-Form 3 along with information about the LLP Agreement entered into between the partners.
File this form within 30 days from the date of conversion of the company into an LLP.
Along with the following attachments:
1. Copy of Certificate of Incorporation (COI) of LLP.
2. Submit Copy of incorporation document in E-Form FiLLiP to ROC.
The following are some of the effects of conversion :
1. The private company is dissolved after conversion.
2. The name of the PLC will remove from the register of the ROC.
3. The conversion will not affect existing liabilities, obligations,etc
4. It shall also no affect agreements, contracts and continued employment.
Company has to intimate all the authorities concerned about the conversion. Further make necessary changes in all the registrations and licenses.
The following are some of benefits of LLP:
1. There is no limit to the number of partners, which is not so in case of private companies.
2. There is no compulsion on holding a minimum number of meetings and maintaining statutory records.
3. No requirement of minimum contribution
4. No requirement of compulsory Audit
There is no option in an LLP to retain Profits of following year unlike other companies. Therefore all profits made must be distributed in the same financial year.