What is the process of conversion of LLP into a private limited company
What is a Limited Liability Partnership?
A limited liability partnership is a legal entity liable for the full extent of its assets, and yet the partners may organize internal structure like a partnership. It is like a mixture of both a company and a partnership firm to a certain extent.
What is a Private Limited Company
A private limited company is based on private ownership registered under the Companies Act,2013. Here, a minimum of 2 directors and 2 shareholders are required. Since it is a separate legal entity it can sue and be sued in the name of a company.
The procedure of Conversion of LLP to the private limited company
The conversion of Limited liability Partnership was legally permitted after 2013.
A meeting should be held for taking the consent of the majority of the partners for the conversion and registration of the firm under the Companies Act, 2013.
Two or more partners are authorized to execute all the documents and papers required.
The firm can keep the same name after conversion in Companies Act, 2013 if the name is available to be taken. The terms ‘limited’ or ‘private limited’ have to add after the name of the company.
Within 20 days of approval of the name, certain documents have to be submitted with the office of the registrar of the company(ROC) according to the jurisdiction of the address location.
What are the documents required for conversion from LLP to a private limited company
A from called E-form URC-1 has to be filled, and the below documents have to be submitted with it-
● Details of name, address, and occupation of all the members of the company and all the persons and partners of LLP.
● Details of the persons who are going to be the first directors of the company. Each of them has to submit an affidavit declaring that the persons are qualified to be the directors as per the act and that the documents submitted with registrar are authentic to the best of their knowledge.
● A copy of the LLP agreement.
● Copy of newspaper advertisement in an English and vernacular newspaper.
● A statement of all the assets and liabilities of the limited liability partnership duly certified by the chartered accountant within 30 days of submission of the Form URC-1.
● A copy of the latest Income tax return of the LLP
● An undertaking that the proposed directors shall comply with the requirements of the Indian Stamp Act, 1899.
● No Objection Certificate from all the secured creditors and written content of a majority of partners.
● A form called INC-33/34 linked with URC-1.Other documents like Memorandum of Association and Articles of Association have to be attached to the form.
What can be the reason for conversion?
● The annual turnover of more than 40 lakh rupees.
● Expansion of a small business
● Promotion of Foreign Direct Investment
● Inviting Shareholders
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