Process for conversion of Partnership Firm into LLP

Limited Liability Partnerships have more priority over the general partnership structure as it is much more beneficial for the partners. It is a business structure that integrates the advantages of the company’s corporate structure and the flexibility of the partnership. The conversion of a partnership firm to LLP shall be as per Section 55 of the Limited Liability Partnership Act 2008 read with Schedule II of the Act.

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LLP is a separate legal entity with compulsory registration with the central government. However, it is not the case with the partnership firm. LLP offers a host of features mentioned below making it more attractive than a partnership firm:

  • Limited liability protection,
  • Survivability,
  • Ability to take on an unlimited number of partners and
  • Ease of ownership transfer.
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Steps for conversion of Partnership Firm into LLP:

Step by step guide for conversion of Partnership Firm into LLP:

  1. Obtain Digital Signature for all the partners.

    Generally partners in a Partnership Firm would not have a digital signature as the same is not necessary for the registration of a partnership firm.

  2. Partners in LLP require a DPIN/DIN. Therefore obtain DPIN/DIN for all partners.

    A DIN is a unique number for each person who is an LLP Partner or Director.

  3. Make an application in RUN-LLP Form for name reservation on MCA website.

    Before applying for reservation of name, applicant must check the rules for selection of LLP name.

  4. File Form FiLLiP for Application and Statement for the Conversion of Partnership Firm into LLP.

    The documents required for LLP registration and for Form FiLLiP.

  5. Once the process of incorporation is complete by filing Form FiLLiP, the next step is to register the LLP Agreement with MCA.

    File LLP Form 3 for LLP Agreement registration which contains details of LLP agreement along with partners resolution with MCA.

  6. On successful conversion into LLP ROC shall issue Certificate of Incorporation of LLP.

    Further when the LLP is incorporated and the Partnership Firm is converted the Partnership Firm would be deemed to be dissolved.

FAQs

What documents are needed to convert a partnership into an LLP?

Following documents are necessary to convert a partnership into an LLP:
– Address proof of the office
– Regulatory authority’s approval
– Details of all the partners and directors
– Consent of all the partners and directors
– Latest income tax return filing
– NOC from tax authorities
– Creditors and their consent
– Certified liabilities and assets of the partnership

Whether any Annual Return would be required to be filed by an LLP?

Every LLP would be required to file an Annual Return with ROC. LLP shall duly file Annual Return in e- Form-11, with the Registrar. Along with the prescribed fee, within a period of 60 days from the end of every financial year.

What is the difference between designated partner and partner?

Both designated partners and partners are categorized differently in LLP. Additionally, the designated partners are more liable than the partners. Further, they are accountable for the day to day business activities as well as for all regulatory and legal compliances.

RUN-LLP – Apply for Name Reservation for LLP Registration

As part of the registration process of a LLP, it should apply for name reservation through RUN-LLP service on MCA Portal. An LLP can file RUN (Reserve Unique Name) on MCA for the following purposes:

  • To Reserve the name of New LLP,
  • To Change the name of any Existing LLP

Before applying for name reservation, the applicant must check the available names of the proposed LLP before filing RUN form to avoid rejection.

Steps to file RUN-LLP for Name Reservation for LLP Registration

  1. Login to MCA

    Log in to your account on MCA Portal with valid username and password

  2. Navigate to RUN-LLP Service

    Go to MCA Services > LLP Services > RUN-LLP (Reserve Unique Name-LLP)

  3. Select option for name reservation

    Select an appropriate option for reserving a name i.e. for incorporating a new LLP or converting into LLP

  4. Enter LLPIN

    Enter LLPIN i.e. Limited Liability Partnership Identification Number if you are applying for the change of name for an existing LLP

  5. Enter Names

    Enter two proposed names and click on the Auto check

  6. Primary Check for Proposed Name – Invalid

    The system does a primary check for the names entered and displays a message whether it is valid or invalid

  7. Primary Check for Proposed Name

    The system does a primary check for the names entered and displays a message whether it is valid or invalid

  8. Objects of Proposed LLP

    In the comments section, describe the objects of the proposed LLP. The officer would accept or reject the name reservation request based on this description

  9. Attach Documents

    If there are any sectoral regulator approvals, NOCs or any other required documents, the applicant should attach such documents too. Click on Submit

  10. Payment

    The next screen is the payment screen on which a fee of Rs.200 is payable. Once the payment is made, the applicant can submit the request. There is no option to make payment with the PayLater option

  11. SRN generated

    On successful submission, an SRN and a Challan would be generated. The applicant can use the SRN to track the status of name approval on MCA

  12. Acknowledgment Letter

    MCA would send the acknowledgment letter for approval or rejection of the proposed name to the registered email ID of the MCA account from which the applicant had submitted the request

  13. File for Incorporation within 3 months

    The applicant has a period of 3 months to file for incorporation of the LLP from the date of acknowledgment letter received on email

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FAQs

Is DPIN of designated partner required for making an application for reservation of name under RUN-LLP service?

No. The applicant does not need DPIN of the designated partner for making an application for name reservation in the RUN-LLP service. Earlier, it was compulsory to hold a DPIN for making an application for approval of the name of an LLP through Form 1.

Is the digital signature of the designated partner required for making an application for reservation of name under RUN-LLP service?

No. The applicant does not need the digital signature of the designated partner for making an application for name reservation in the RUN-LLP service. Earlier, it was compulsory to have a DSC i.e. digital signature for making an application for approval of the name of an LLP through Form 1.

Changes in LLP Registration Process – RUN-LLP and FiLLiP

The MCA (Ministry of Corporate Affairs) had notified revised rules for LLP effective from 02nd October 2018. It introduced new e-forms and changes to the old process of incorporation i.e. registration of LLP. Here is a brief comparison:

Changes in LLP Registration Process on MCA

Changes

Old Process

New Process
Digital Signature (DSC) To file Form-1 for the name approval, DSC of the designated partner was mandatory The applicant can submit a request for name approval without DSC under new RUN-LLP service [Register DSC on MCA]
DIN/DPIN The applicant needs to file an application for allotment of DIN/DPIN separately through Form DIR-3 The applicant can file an application for allotment of DIN/DPIN together with Form FiLLiP
DIN/DPIN To file Form-2 for incorporation, DIN / DPIN of the signing partner was compulsory To file Form FiLLiP for incorporation, PAN of the signing partner is allowed in absence of DIN / DPIN
Name Approval Application for name approval could be made by filing Form 1 for which DSC and DPIN was mandatory Request for name approval can be made through RUN-LLP service for which DSC and DPIN is not required
Incorporation The incorporation can be applied through Form-2 after the name is approved on filing Form-1 Incorporation and name approval together can be applied for by filing Form FiLLiP
Forms Form DIR-3 – Application for DIN / DPIN RUN-LLP service – Name reservation
Application for Name Approval – Form 1 Name reservation, DIN / DPIN application, Incorporation – Form FiLLiP 
Incorporation of LLP – Form 2 Name reservation, DIN / DPIN application, Incorporation – Form FiLLiP
Registration of LLP Agreement – Form 3 Registration of LLP Agreement – Form 3

FAQs

Is DSC mandatory for LLP name approval?

MCA has revised the LLP registration process effective from 02nd October 2018. In this new process, the LLP name approval form can now be submitted without the Digital Signatory Certificate (DSC) of the applicant.

What is Form FiLLiP under new changes of LLP?

Incorporation and name approval can now be applied simultaneously.
Form FiLLiP allows applicants to request incorporation and name approval both through the sane form.

What has remained constant after the new process of LLP registration?

Form – 5 (Notice for change of name), Form – 17 (Application and statement for the conversion of a firm into LLP) & Form – 18 (Application and Statement for conversion of a Private Company/Unlisted Public Company into LLP) will remain same with minor modifications.
However, RUN-LLP SRN is to be substituted for Form-1 SRN in the relevant field & PAN is allowed to be entered in the DSC section.

What is the fee for registration LLP? (E-forms RUN-LLP & FiLLiP)

MCA (Ministry of Corporate Affairs) had notified revised rules for LLP (Limited Liability Partnership) Incorporation. These rules became effective from 02/10/2018. MCA fee for LLP Registration comprises of the following:

RUN-LLP Service – LLP Registration

Request for name reservation of LLP can be submitted through the RUN service on MCA. Details need to be filled online and the request can be submitted on payment of a fee of Rs.200/- There is no PayLater option to make the payment. Before applying for reservation of name, applicant must check the rules for selection of LLP name.

Form FiLLiP – LLP Registration

This is an e-form for the Incorporation of LLP. It should be filed electronically on the MCA Portal. The fee charged depends on the total amount of contribution to start the LLP. There is a Pay Later option under which the user can upload the e-form and generate SRN. Payment can be made later before the last date mentioned on the PayLater Challan.

Amount of Contribution (Rs.) Fees (Rs.)
Up to 1,00,000 500
1,00,000 < contribution < 5,00,000 2000
5,00,000 < contribution < 10,00,000 4000
More than 10,00,000 5000

Form 3 – LLP Registration

This is an e-form for registering the LLP Agreement with the MCA. It should be filed electronically on the MCA Portal. The fee charged depends on the total amount of contribution to start the LLP. There is a Pay Later option under which the user can upload the e-form and generate SRN. Payment can be made later before the last date mentioned on the PayLater Challan.


Amount of Contribution (Rs.) Fee (Rs.)
Up to 1,00,000 50
1,00,000 < contribution < 5,00,000 100
5,00,000 < contribution < 10,00,000 150
More than 10,00,000 200
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Stamp Duty – LLP Registration

There is no stamp duty required to be paid in the entire process of LLP incorporation. Unlike the incorporation of other entities on MCA, LLP Registration Fee does not include Stamp Duty.

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FAQs

How much time is involved in registration process of LLP?

LLP formation starting from obtaining DSC to Filing Form 3 takes approximately 15 days subject to availability of all the documents.

Is an LLP agreement required to be registered?

Execution of an LLP Agreement is mandatory as per Section 23 of the Act. LLP Agreement is required to be filed with the registrar in eForm- 3 within 30 days of incorporation of LLP.

Is passport mandatory proof to be submitted while LLP registration?

For NRIs and Foreign officials, it is mandatory to submit their passports. It is an identity proof requirement for becoming a partner in any Indian LLP.

Process of LLP Registration on MCA (E-forms RUN-LLP and FiLLiP)

It has now become easy to start a business by incorporating a company or an LLP. MCA has introduced simplified rules for process of LLP Registration by introducing e-forms RUN-LLP and FiLLiP.

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RUN-LLP Service: Reserve Unique Name – LLP Registration Process

This is a service through which the applicant can reserve a name for its new LLP or for changing the name of an existing LLP. Under this service, you can apply for two proposed names only. The applicant must pay a fee of INR 200 online without the pay later option. Then, MCA shall process the request and send an email with an acknowledgement letter for approval or rejection of the proposed name.

Following are not required for name reservation through the RUN-LLP service of MCA:

  1. DPIN i.e. Designated Partner Identification Number
  2. DIN i.e. Director Identification Number
  3. DSC i.e. Digital Signature

Form FiLLiP: Form for LLP Registration Process

Post the approval of the name by the MCA, you can apply for the LLP Registration process on filing Form FiLLiP. The following services are inclusive under this form:

  • Reservation of name for the proposed LLP
  • Application for allotment of DPIN for the designated partners
  • Incorporation of the proposed LLP

DSC i.e. Digital Signature of anyone designated partner is mandatory for filing Form FiLLiP. Form FiLLiP should be filed electronically on the MCA Portal on payment of prescribed fee based on the amount of contribution.

Form 3 – Register LLP Agreement

Once the process of incorporation is complete by filing Form FiLLiP, the next step is to register the LLP Agreement with MCA. LLP Agreement is a legal document in the form of a contract between the partners. It should be signed by all the partners and duly notarized. Important information such as profit sharing ratio, amount of contribution, nature of the business activity, rights and duties of partners, etc are defined in the LLP Agreement.

E-Forms for LLP Services

Service Options
Change in name of an existing LLP RUN Service LLP – Reservation of name
Form 5 – Notice for change of name
Incorporation of a new LLP Option 1
RUN Service LLP – Reservation of name
Form FiLLiP – DPIN allotment and Incorporation
Form 3 – Registration of LLP Agreement
Option 2
Form FiLLiP – Reservation of name, DPIN allotment and Incorporation
Form 3 – Registration of LLP Agreement

FAQs

How much time is involved in registration process of LLP?

Generally LLP registration process starting from obtaining DSC to Filing Form 3 takes approximately 15 days subject to availability of all the documents.

Is an LLP agreement required to be registered?

Yes it is mandatory as per Section 23 of the Act.  . The LLP Agreement is required to be filed with the registrar in eForm – 3 within 30 days of incorporation of LLP.

Can LLP have directors?

Yes. Just like a company, LLP is a Body Corporate having a separate legal entity and hence LLP can have its own internal management structure.

Rules to select LLP Name to avoid rejection on MCA

To incorporate a new LLP or change the name of an existing LLP, you can apply for reservation of name through the RUN-LLP service available on the MCA Portal.

Rules to select proposed name of LLP

  1. The name should not be obstructed in the Emblems and Names (Prevention of Improper Use) Act, 1950
  2. It should not be an exact translation in Hindi or English of an existing LLP
  3. It should not have a phonetic resemblance to the name of an existing LLP. Eg:  J.K. LLP v/s Jay Kay LLP
  4. It must not contain:
    • any words that are offensive to a specific set of people
    • words like co-operative or sahakari or a similar word in a regional language
    • words like national, union, central, federal, republic, president, rashtrapati etc that falsely indicates a connection with the central or state government
    • the word ‘British India’
    • words like bank, insurance, banking, venture capital, mutual fund etc without the approval of the regulatory authority
    • words like company secretary, chartered accountant, advocate etc without  obtaining approval from the concerned council
  5. The name must not indicate a connection with an embassy, consulate or a foreign government
  6. It must not include the name of a registered trademark unless the owner gives the consent
  7. It must not resemble to the name of an LLP or Company in liquidation or the one which is struck off up to a period of 5 years
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To read more about the laws and rules governing the name reservation for an LLP, refer to the Instruction Kit of MCA

FAQs

Why does an LLP name gets rejected?

As per Companies Act, 2013 the name of a company cannot be identical to the name of an existing  LLP or trademark. Hence, if the name is similar or identical to an existing company, the name application will be rejected.

How much time does it take for LLP name approval?

To approve your Limited Liability Partnership name with ROC can generally take about 3–5 days once you upload the form & payment of fees has been cleared.

Can a LLP be converted into company?

Indeed. It is possible to convert an LLP into a Pvt. Ltd. company as per the provisions contained in Section 366 of the Companies Act, 2013 and Company (Authorised to Register) Rules, 2014