Convert Partnership to LLP
A company where two or more people share ownership of the business is a partnership company. In a partnership company, each partner contributes to all aspects of the business. The partners also share the profits and losses of the business. Whereas LLP, which is limited liability partnership, is a company where all partners have limited liabilities. Here, one partner is not responsible for other partners’ diligence or negligence.
Advantages of LLP (Heading)
- Limited liability protection is one of the main advantages that make partners look for conversion from Partnership to LLP.
- It is an interesting and top choice for small and medium sized businesses as it is a great way to bring business synergies together.
- It forms a simple working condition limiting liability to partners.
- The existence and running of LLP does not solely depend on either of the partner. For example, with the demise of a partner in Partnership Company may cause the company to disintegrate. Whereas, in LLP, it may not cease to exist in such a case. The partners of an LLP may keep changing from time to time and it will not affect the LLP’s continuity.
- The liability of partners in LLP is limited to the amount of capital invested and there is no minimum limit to the amount of capital to be invested.
- In a partnership firm, minimum number of partners is two and maximum is limited to ten. However in LLP, there is no upper limit to number of partners.
- LLP’s can be merged with other LLPs unlike Partnership Companies.
Documents needed to convert Partnership to LLP (Heading)
- Designated partner identification number (DPIN) or Director Identification Number (DIN): Filing an application under DPIN must be obtained for all partners
- Digital Signature Certificate (DSC): This is necessary to apply for digital authentication of the company
- LLP-1: This e-form is needed to be filled to add “LLP” to the existing firm name. The registrar will accordingly verify any resemblance to the existing firm names or trademark registered or pending registration.
- Draft of LLP agreement
- Form-17 with Registrar of Companies (ROC): This is application of conversion is to be filled with the following attachments
- Statement of consent of Partners for conversion
- List of all creditors along with their consent to conversion
- Statement of assets and liabilities of the company duly certified by a CA
- Approval from any other body/authority as may be required. Approval of the governing council for professional firms
- NOC from Income Tax authorities
- Financial statements of the Partnership Company
- Particulars of any court proceedings
- Rejection letter of ROC in case of any earlier conversion application
Frequently Asked Question
How can make the payment of the application?
In case company wants to change its registered office within local limits of the same city or place, intimation regarding the same has to be filed in Form INC-22 within 15 days from the date of change i.e. passing Board Resolution.
Following information & documents are required for change in registered office of the Company:-a) If registered office is changed with in local limits of the same city.
Information
- New address of the Company.
- Name & DSC of the Authorised director for form filing.
Documents
- Board Resolution for the change of registered office of the company.
- NOC from the owner of the company for details of the name of the company which are registered at the same address.
- Proof of new registered office of the company (Electricity Bill/Telephone Bill/Lease Deed).
What happens if an application is rejected?
If the registrar is satisfied with the application, it may proceed to issue the certificate of registration. After which, the new LLP formed must submit a form-14 to Registrar of Firms within 15 days informing with whom the LLP was registered.
What happens if an application is rejected?
The applicant may apply to the tribunal within sixty days from date of intimation of rejection.
When does the LLP come into effect?
Once the procedure to convert Partnership to LLP comes to complete and the registrar provides the certificate of registration, the firm must follow the rules and regulations as applicable to LLPs.
Will the assets belonging to Partnership get transferred to LLP with the conversion?
No. For any licenses, permits, registrations, properties, approvals, etc., belonging to prior Partnership Company, the newly formed LLP must follow the required procedures with concerned authorities to transfer the assets.
Are there any formalities to be followed after the LLP comes into effect?
The LLP shall ensure that for a period of twelve months commencing not later than 14 days after the date of registration, every official correspondence of the LLP bears the following:
- A statement that it was, as from the date of registration, converted from a firm into LLP
- The name and registration number, if applicable, of the firm from which it was converted
