LLP to Private Limited Conversion
Starting from ₹15,000 + GST
Table Of Content
LLP to Private Limited Conversion
A Limited Liability Partnership (LLP) is a popular choice for small and medium businesses in India, offering the dual benefits of limited liability and operational flexibility. However, as businesses grow, their requirements evolve, prompting many LLPs to explore converting into a Private Limited Company. This transition allows businesses to scale operations, attract larger investments, and establish a stronger presence in the market.
Unlike LLPs, which have limitations on raising equity capital, Private Limited Companies can issue shares, making them a preferred choice for entrepreneurs seeking venture capital or private equity funding. Additionally, the corporate identity of a Private Limited Company instills greater confidence in clients, investors, and other stakeholders, making it easier to expand and build credibility in competitive markets.
The conversion process from LLP to a Private Limited Company involves fulfilling legal, financial, and compliance requirements under the Companies Act, 2013. While it might seem daunting, the benefits of enhanced fundraising potential, succession planning, and ease of ownership transfer often outweigh the challenges. Understanding the conversion process, its eligibility criteria, and the necessary documentation is crucial for businesses considering this transformation.
Benefits of Converting LLP to a Private Limited Company
Eligibility Criteria for Conversion
Process of Converting LLP to a Private Limited Company
Step 1
Approval of Company Name
File Form INC-1 with the Registrar of Companies (ROC) to reserve a unique name for the Private Limited Company.
Step 2
Drafting MOA and AOA
Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) to define the company’s purpose and operational guidelines.
Step 3
Passing a Special Resolution
Conduct a partner meeting to pass a special resolution approving the conversion and record it for ROC submission.
Step 4
Filing Form URC-1
Submit Form URC-1 to officially initiate the conversion process with the ROC.
Step 5
Obtain Digital Signatures
Acquire Digital Signature Certificates (DSCs) for directors to facilitate the filing of digital forms.
Step 6
Filing Forms INC-32, INC-33, and INC-34
File INC-32 for incorporation, and INC-33 and INC-34 for e-MOA and e-AOA.
Step 7
Certificate of Incorporation
Upon verification, the ROC issues the Certificate of Incorporation, confirming the conversion.
Documents Required LLP to Private Limited Conversion
FAQs
How do I convert my LLP into a Private Limited Company?
The process involves name approval, drafting MOA and AOA, passing resolutions, filing forms with ROC, and obtaining a Certificate of Incorporation.
Is the consent of all partners required for conversion?
Yes, all partners must consent, and a special resolution is mandatory.
What are the key advantages of converting LLP to a Private Limited Company?
Advantages include better fundraising, enhanced credibility, limited liability, and easier ownership transfer.
How long does the conversion process take?
Typically, it takes 30 to 45 days, depending on document preparation and ROC processing time.
What legal requirements must be fulfilled for conversion?
The conversion must comply with the Companies Act, 2013, and obtain ROC approval.
What documents are required to start the conversion?
Essential documents include DSCs, partner consent letters, PAN, address proofs, and NOC from creditors.
What is the cost of converting an LLP to a Private Limited Company?
Costs vary based on ROC fees, consultant charges, and legal fees.
Is there a minimum capital requirement for a Private Limited Company?
Yes, a minimum paid-up capital of ₹1,00,000 is required.
Do I need a new GST registration after conversion?
Yes, a fresh GST registration under the Private Limited Company’s name is necessary.
How are the LLP's assets and liabilities managed during conversion?
Assets and liabilities are seamlessly transferred to the newly formed Private Limited Company.
Can the Private Limited Company retain the LLP's name?
Yes, subject to approval by the ROC.
Does the Private Limited Company need a new bank account?
Yes, it is mandatory to open a new account in the name of the Private Limited Company.
What happens if there is foreign investment in the LLP during conversion?
Additional compliances under FEMA and regulatory approvals are required for conversion.
What tax implications arise during conversion?
Tax implications depend on asset transfers and the structure of the Private Limited Company; expert consultation is recommended.
Is there a need to notify creditors about the conversion?
Yes, creditors must be informed, and their NOC is required as part of the documentation.