Conversion of LLP into Private Limited Company

Every company starts with the proposition of growing and leading in the market. If a company starts with an LLP, it should be upgraded to a Private Limited Company or Public Limited Company to avail of the enhanced benefits. If any LLP company wants to convert it to a Private Limited Ccompany for enhanced facilities, it needs to follow some specific compliances. With the growth of the company, you must increase the funds from investors. A Private Limited Company is a step ahead of attracting investors.

Due to a few compliance requirements, most small businesses and startups prefer a Limited Liability Partnership (LLP) to a Private Limited Company. However, when it grows its profit, and capital and wants to expand, it needs to increase shareholders. The primary benefit of LLP to Private Limited conversion is that it can transfer shareholders easily.

Eligibility Criteria for the Conversion of LLP to Private Limited Company

The LLP must have at least 2 partners for its conversion.

The existing LLP needs to file a Statutory Return and LLP Agreement.

Approval of all partners is essential to converting from an LLP to a Company.

The partners and their contribution to the LLP will be considered as the shareholder and the capital of the company.

Benefits of Converting LLP to Private Limited Company
Helps Grow the Brand
By the way of conversion from LLP to private limited company, it continues the legacy of LLP and the reputation it earns. At the same time when it becomes a Private Limited Company, an LLP earns more reputation and respect. It helps capital gain after all.The shareholders of a Public Limited Company can transfer their shares to another party very easily and smoothly. They only need to fill out the share transfer form and hand over the share transfer certificate to the buyers.
Carry Forward the Icon
The declaration all your losses and depreciation or appreciation will carry forward with you. According to the Income Tax Act, the unabsorbed losses or the depreciation of the LLP will be transferred to the new formation of your LLP to Private Limited Company Conversion.
Ease in Fund Raising
The investors are more prone to find a Private Limited Company for easy investment. Besides, the entire details of a Private Limited Company are verified by the MCA authorities.
ESOP to Employees
An ESOP or Employee Stock Ownership Plan is an employee benefit plan that gives workers interest towards the company in the form of share exchange. ESOPs inspires the company employees to offer their all for the betterment of the company as their personal interest is lied in it.The liability of a Private Limited company converts to a Public Limited Company. So, as per the rule, the liability will also be modified.
No Extra Tax for Capital Gain
The assets of the LLPs are transferred to the Private Limited Company newly converted. There shall be no capital gain tax levied on such transfer of LLP to Private Limited Company. You have to keep in mind that the LLP is replaced by the Private Limited Company and there is no capital gain tax.The shares of a Public Limited Company can easily and freely be transferred to another person/ share buyer by following the SEBI Act and Companies Act 2013.

Documents for Converting a Private Limited to Public Limited Company

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PAN Card of Directors and Shareholders

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Passport/Driving Licenses/Voter ID Card/Adhaar Card

Identity Proof Of the Directors / Shareholders

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Telephone Bill/electricity bill/Latest Bank Account Address, not later than 2 months

Address Proof Of the Directors / Shareholders

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Passport Size Photograph

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electricity bill/telephone bill, rent agreement of the registered office of the company

Business Address Proof

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LLP Agreement and Certificate of Incorporation of LLP

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LLP Income Tax Return of the Previous Year

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An affidavit from all the partners for the entity dissolution.

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Newspaper Advertisement Copy (URC-2)

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Statement of Assets and Liablity Certified by CA.

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Declaration of Directors confirmation i.e. DIR-2

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List of Partners with details.

Minimum Requirement of Conversion

Minimu 2 Shareholders
Minimu 2 Directors
DIN of all Directors
DSC of all Directors
Shareholder and Directors can be same person

Steps to Convert LLP into a Private Limited Company

Following are the steps for conversion of a Limited Liability Partnership to a Private Limited Company.

Consent of all Partners of the LLP

The process starts with a meeting among partners to get approval for converting the LLP they have to a Private Limited Company. According to section 366 of the Companies Act 2013, the approval of all partners is essential. Among all partners, only 2 partners need to be authorized to collect consent from all the partners for LLP conversion.

Publication to the Newspaper

The intention of converting from LLP to a Pvt. Ltd Company must be disclosed in at least two popular newspapers. Among them, the advertisement must be one in a vernacular language newspaper and the other in the English daily. The announcement should be published for consecutive 21 days before filing URC-1.

NOC required from ROC and Creditors

NOC or No Objection Certificate, is required from the Register of Companies and Creditors. Their NOC must be unconditional.

Process Name Reservation of Company in RUN

RUN or Reserve Unique Name, is an e-form introduced by the Ministry Of Corporate Affairs. So, apply for name reservation for companies in RUN for the new private limited company. The application goes to the ROC.

E-file URC-1, MOA, AOA, DIR-2 Forms and SPICe+

Within 30 days of the name reservation application of the conversion, you have to file URC-1 along with the SPICe Plus form, eMoA, eAoA, and DIR-2. ROC approves the forms and issues a new certificate for incorporation in the name of the company.

Comparison

PARTICULARS
PRIVATE LIMITED COMPANY
PUBLIC LIMITED COMPANY
LIMITED LIABILITY PARTNERSHIP
ACT
COMPANIES ACT, 2013
COMPANIES ACT, 2013
LLP ACT, 2008
Registration Requirement
MANDATORY
MANDATORY
MANDATORY
SEPERATE LEGAL ENTITY
YES
YES
YES
LIABILITY PROTECTION
LIMITED
LIMITED
LIMITED
STATUTORY AUDIT
MANDATORY
MANDATORY
MANDATORY
OWNERSHIP TRANSFER LIABILITY
YES
YES
YES
PERPETUAL SUCCESSION
YES
YES
YES
FOREIGN PARTICIPATION
ALLOWED
ALLOWED
NOT ALLOWED
TAX RATE
MODERATE
MODERATE
HIGH
STATUTORY COMPLIANCE
HIGH
HIGH
MODERATE

How we can help in Appointment of Director

Fill our Application Form.

⟶1

Share Information about the Incorporation

⟶2

Our team will collect Documents and get relevant documents signed.

⟶3

CA / CS will submitt the forms and Documents to ROC.

⟶4

Congrats! Your Limited Liabilty Partnership is now Private Limited Company.

⟶5

Can an LLP Be Converted into a Private Limited Company?
Yes, An LLP or Limited Liability Partnership can easily be converted to a Private Limited Company. The conversion involves following MCA rules and some other compliance. The ROC or Resister of Companies will replace the name from LLP to new private limited company.
You can convert LLP to a Private Limited or Public Limited Company. You have to follow the compliance of MCA and take the support of a CA/CS to get it done easily and effortlessly.
There are a lot of interlinked factors to convert an LLP into a Private Limited Company. The delay in formality compliance and flawless application determine the duration of LLP conversion. If everything goes smoothly, it may take from 30 to 60 days.
The cost of converting an LLP into a Private Limited Company may vary for many factors. The government fee may be increased/decreased over time. The stamp duty, and professional fees for CA/CS may also vary over time.
The basic form for it is URC-1, SPICe plus, INC-23, INC-24, MoA, AoA, and some other basic forms. Visit the Online Legal India page for LLP to PVT LTD company conversion and learn more in detail.

List of Documents Required for Conversion of LLP into Company

  • List of Partners with details
  • Declaration of Directors’ confirmation
  • An affidavit from all the partners for the entity dissolution
  • Newspaper Advertisement
  • LLP Agreement
  • Certificate of Registration of the LLP
  • Income Tax Return Copy of the LLP
  • Statement of Assets & Liability Certified by CA
  • Newspaper Advertisement Copy (URC-2)
  • NOC From the ROC where the LLP is registered
  • NOC From the Creditors

List of Attachments in E-form SPICe+

  • DIR-2 declaration from all directors
  • Identity and Address Proof of Directors
  • NOC from the owner of the premises
  • Proof of Registered Office
Yes, you can do it. Contact Online Legal India to get minute details for it.
Apply Now

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