fbpx

Convert Partnership to LLP


 

Limited Liability Partnerships have an upper hand over the general partnership structure as it is much more beneficial for the partners involved. LLP is a separate legal entity with compulsory registration with the central government, which is not the case with the partnership. It is a business structure that integrates the advantages of the company’s corporate structure and the flexibility of the partnership, i.e. for organizing their internal composition and operation as a partnership. Therefore conversion of partnership firm into LLP is a good business decision to secure the partners’ rights and limit their liabilities.

Benefits of Partnership to a Private Limited Company Conversion


 

Limited Liability of Owners

The liability of Partners is limited to an extent of capital contribution as agreed by the partners in the LLP Agreement. The loss or debt of LLP cannot be assigned to partners even at liquidation. Further, one partner is not held responsible for the actions of negligence or misconduct of any other partner.
crown

separate legal entity

The partnership is not a separate legal entity. In case if the partner(s) dies or retires or in any other case has to leave the firm, the partnership ceases to exist. In this case, a new partnership has to be formed; but this is not the case with a limited liability partnership. Limited liability partnership is a separate legal entity.
people

Tax benefits

LLP saves the Dividend Distribution Tax, Minimum Alternative Tax, and Income Tax because interest and remuneration are paid to partners as a salary that is payable to directors.
capital

Raising Capital

Raising Capital is easier in the LLP structure as it allows a limited partner to participate without taking on any accountability, unlike the general partnership where all common partners have unrestrained liability.

Documents required to Convert Partnership to LLP


 
 
edit-document-black

PAN Card

PAN Card of all partners and the firm Foreign nationals may provide passport
edit-document-black

ID Proof

Aadhar Card/ Voter ID/ Passport/ Driving License of all partners
edit-document-black

Photograph

Latest Passport size photograph of all partners
edit-document-black

Business Address Proof

Electricity Bill/ Telephone Bill of the registered office address
 
edit-document-black

NOC from owner

No Objection Certificate to be obtained from the owner of registered office
edit-document-black

Rent Agreement

Rent Agreement of the registered office should be provided, if any
edit-document-black

RoF

Certificate In case the partnership firm is registered, RoF certificate is compulsory
 

How to Convert Partnership to LLP with CCA?

1. Fill the form given on the right

2. Select your package

3. Fill the company details

4. Pay the amount & done

Once you done, our expert will contact you.

 

 

Frequently Asked Questions

 
1What are the primary requirements for the conversion of a partnership firm into an LLP?
The partnership is required to consist of the same partners that were present in the original Partnership and in the same proportion in which their capital accounts stood in the books of the Firm on the date of conversion. Therefore, the LLP cannot have more or less partners than the extant Partnership Firm, and any changes in the number of partners can be made only after conversion into the LLP.
2How to reserve the name for a Limited Liability Partnership?
LLP name is reserved through an online form. In accordance with the prescribed regulations, the partners can provide a maximum of 6 names in preferential order to reserve any one. The Registrar may ask to re-submit the application with a different name if given names do not fall under criteria of uniqueness, relevancy or do not fulfill the other requirements.
3Is there any minimum capital requirement for LLP registration in India?
No. There is no minimum amount prescribed to form an LLP. It can start off with any amount of capital demanded by the business. Although there is no minimum requirement, every partner must make a contribution to LLP. The amount of capital contribution is disclosed in the LLP Agreement and amount of stamp duty to be paid is decided by total contribution amount.
4What is Director Identification Number (DIN)? Is DPIN required for LLP Registration?
Director Identification Number is a unique number assigned by the Ministry of Corporate Affairs to Individuals on application made which allows any individual to be a Director in any Company or Designated Partner in LLP. Further, the concept of DPIN (Designated Partner Identification Number) does not persist anymore with respect to incorporation of LLP.
5What are the requirements to be a Partner/ Designated Partner for LLP formation?
There are no limitations in terms of citizenship or residency to be a Partner. Therefore, the LLP Act, 2008 allows Foreign Nationals, including Foreign Companies & LLPs to incorporate LLP in India; provided at least one Designated Partner is a resident of India. However, the person should be of age 18 years or above i.e. not a minor and competent to enter into a contract. Also, the proposed Designated Partner shall have DIN.
6What is LLP Agreement? Does it require filing with MCA?
LLP Agreement is an agreement executed by all the designated partners and partners after LLP incorporation. The agreement prescribes all the clauses related to business; including the rights, role, duties and responsibilities of partners. The agreement must be filed within 30 days of the issue of a certificate of incorporation. Failure to which will charge an additional fee of ₹ 100 per day till the date of filing.
7How to change partners in LLP?
To effect any changes in the Limited Liability Partnership, the Partners shall pass the resolution at the meeting of Partners as required by the LLP Agreement of concerned Limited Liability Partnership. Further, the resolution shall authorize any of the existing Designated Partner to act on behalf of the LLP and its Partners. Also, the authorized partners shall also hold a valid DSC to file the application to Registrar. As soon as the partners execute the Supplement Agreement for a change of partner or their respective designation, an application shall be filed with MCA to approve the changes of a partner or the designation.
8Whether any capital gain is payable on conversion of partnership into LLP?
LLP and general partnership are treated equivalently (except for recovery purpose) in the Act; the conversion from a general partnership firm to LLP will have no tax implication. This is true if the rights and obligation of the partners remain the same after conversion and if there is no transfer of any asset or liability after the conversion. If there is a violation of these conditions, the provision of capital gain will apply.
9Can the same name be used for the newly incorporated LLP?
Generally, the basic purpose of conversion is for keeping the same name to maintain the brand identity in the market. To convert the LLP under the original name it is essential to attach any valid proof that corroborates the claim of use of the brand name by the firm.in such cases, MCA grants the approval on the basis of documents attached in the concerned form for name reservation.
 

More Questions?

Contact us for additional assistance

 

More Questions?

Contact us for additional assistance