As per the business strategy company wishes to convert them into an LLP and the governing section for Conversion of Company into LLP is section 56, Third Schedule and Fourth Schedule of the LLP Act, 2008. Major Highlights for conversion are covered hereby,
As per section 2(20) of the Companies Act, 2013 Company means a Company incorporated under this Act or under any previous company law.
Section 2(68) of the Companies Act, 2013 “private company” means a company having a minimum paid-up share capital as may be prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) Except in case of One Person Company, limits the number of its members to two hundred:
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that—
(A) Persons who are in the employment of the company; and
(B) Persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company;
The Limited Liability Partnership (LLP) is a unique and versatile business entity that combines the advantages of limited liability, typically associated with companies, with the flexibility and characteristics of a partnership. By encompassing elements of both a corporate structure and a partnership firm, an LLP is often referred to as a hybrid entity, bridging the gap between a company and a partnership. This business form offers its members protection from personal liability while allowing them to operate and manage the business in a more collaborative and adaptable manner, akin to a partnership.
Meaning of Conversion
In the context of a private company converting into a limited liability partnership, 'conversion' refers to the comprehensive transfer of the private company's property, assets, interests, rights, privileges, liabilities, obligations, and overall business undertaking to a limited liability partnership, as per the guidelines specified in Schedule 3 of the LLP Act, 2008.
Step 1: The first essential step is to convene a board meeting to discuss the proposal for converting the company into a Limited Liability Partnership (LLP). During the meeting, a board resolution must be passed, authorizing the conversion and granting approval to any director to apply for the desired name of the LLP.
Step 2: After obtaining the board's approval, the company must obtain written consent from all its shareholders regarding the conversion into an LLP. This step ensures that all stakeholders are informed and supportive of the decision.
Step 3: Next, the company is required to apply for the reservation of the chosen LLP name with the Registrar of Companies (ROC). Once the application is processed and approved, the company will receive a name approval certificate from the ROC.
Step 4: With the name approval in hand, the company must proceed to execute all necessary documents, including consent forms and subscriber sheets. Additionally, they need to file the prescribed forms, namely FiLLiP and Form 18, with the ROC. These forms contain important information and details related to the conversion process.
It is important to meticulously follow each of these steps to ensure a smooth and legally compliant conversion of the company into an LLP. Consulting with legal and financial experts during the process is advisable to avoid any potential pitfalls or oversights.
Documents required for conversion
Documents for FiLLip Form
Documents for form 18
After receiving approval for the conversion from the Registrar of Companies (RoC), proceed to execute the LLP Agreement. Subsequently, ensure the timely filing of the LLP Agreement with the RoC using e-form LLP 3, all within 30 days from the date of conversion approval granted by the RoC.
Based on the preceding discussions, it is evident that a Limited Liability Partnership (LLP) offers greater convenience in terms of compliance and taxation compared to a traditional company. As a result, it becomes a more favourable choice, particularly for small entrepreneurs. Moreover, existing companies can smoothly transition into an LLP structure, ensuring they retain the benefits of Limited Liability while reducing the burden of compliance.
We share the detailed and reasonable estimated costs, documents and prerequisites for the complete process before starting the process to ensure transparency.
Our team warrants hassle free documentation. We collect the necessary documents and share the relevant drafts to ensure a timely filing and delivery.
Upon collecting the necessary documents and information, we waste no time in preparation and filing of your application. development on your application is brought to your attention.
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As per the business strategy company wishes to convert them into an LLP and the governing section for Conversion of Company into LLP is section 56, Third Schedule and Fourth Schedule of the LLP Act, 2008.
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