Conversion of Limited Liability Partnership To Company

1. Introduction

Back in the year 2009 when the Limited Liability partnership Act, 2008 was first enacted, many businesses started their operations in India as a Limited Liability Partnership (LLP) which is a combination of partnership firm providing a limited liability to its partners. However, sooner with time, LLP was seen having certain disadvantages as well, the major being difficulty in obtaining funds from public or banks/ financial institutions which acted as a hurdle in growth and expansion of various businesses. This resulted in conversion of LLPs into private/ public company.
 
Section 366 to 374 of the Companies Act, 2013 read with the Companies (Authorized to Register) Rules, 2014 deals with provisions related to conversion of a LLP into company. In this Article, we have laid down the detailed procedure for conversion of LLP into company.

2. Procedure for conversion of LLP into company

Step 1: Publication of Newspaper Advertisement
LLP proposed to be converted into a private/ public limited company is required to publish a newspaper advertisement in Form URC-2, one in English and one in vernacular language circulating in the district in which LLP is situated seeking objections (if any) within 21 clear days from the date of publication of notice.
 
Step 2: Notice of conversion to the Registrar of Companies
Notice of conversion of LLP into company shall also be submitted with the Registrar along with a copy of the newspaper advertisement either on the date of publication of newspaper advertisement or the following day. Proof of service of such notice shall be attached with the e-Form URC-1 to be filed with the Registrar for conversion of LLP into company.
 
Step 3: Reservation of name
An application for reservation of name is required to be filed in PART A of e-Form Spice+. The name once approved & reserved shall remain valid for a period of 20 days from the date of approval within which the company shall file the requisite documents related to conversion. The name of the company shall be same as that of the LLP with addition of suffix Limited (in case of public limited company) or Private Limited (in case of private limited company) with deletion of LLP as suffix.
 
Step 4: Filing of documents for conversion
For conversion of LLP into company, e-Form URC-1, SPICe+, INC-9 and AGILE PRO are required to be filed with the Registrar. It is mandatory for all the persons proposed to be appointed as Director to obtain Director Identification Number (DIN). Further, where total number of subscribers and/or directors is less than or equal to 20 and all such subscribers and/or directors have DIN/PAN, INC-9 is self-generated and is required to be filed as an e-Form. In all other cases, physical copy of INC-9 is required to be submitted with the Registrar.

3. Documents required for URC-1:

• Consent of secured creditors of the LLP to the proposed conversion. However in case LLP does not have any secured creditors, a no-objection certificate confirming that the LLP does not have any secured creditor signed by any Designated Partner of the LLP shall be submitted;
• Scanned copy of the Newspaper Advertisement;
• Scanned copy of the notice served to the Registrar along with proof of service of such notice (as provided in Step 2);
• Affidavit from all the Designated Partners for dissolution of LLP;
• List of proposed Directors;
• List of proposed shareholders;
• Scanned copy of LLP Agreement;
• Written consent from majority of the partners agreeing for such conversion;
• An undertaking from the proposed directors for compliance with requirements of the Indian Stamp Act, 1899 (as applicable);
• Certificate from a CA/CS/CWA certifying the compliance with all the provisions of Stamp Act, to the extent applicable
• A copy of the latest Income Tax Return of the LLP;
• A statement of accounts, prepared not later than fifteen days preceding the date of seeking registration and certified by the Auditor together with the Audited Financial Statements of the previous year, wherever applicable;
• A declaration that the LLP has filed all documents which are required to be filed under the LLP Act with the Registrar;
• Certificate of Incorporation of LLP;
• List of Designated Partners;

4. Documents required for SPICe+

• Memorandum of Association;
• Articles of Association;
• INC-9 (where total number of subscribers and/or directors is greater than 20 OR any such subscribers and/or directors does not have DIN/PAN);
• Proof of registered office address;
• Copy of utility bill of registered office not older than 2 months;
• Copy of certificate of incorporation of the foreign body corporate and resolution passed (in case the subscriber to the proposed company is Body Corporate);
• Resolution passed by promoter company (in case subscriber to the proposed company is a Company itself);
• Interest of first directors in other companies;
• Proof of identity and proof of residential address of each of the subscriber and director;
• Copy of PAN of each of the subscriber and director 

5. Documents required for AGILE PRO

• Proof of place of business;
• Proof of Appointment of authorised signatory;
• Passport size photographs of Director who shall act as Authorized Signatory

6. Effect of conversion

The Registrar upon scrutiny of the e-Forms submitted for conversion and if satisfied, will issue a fresh Certificate of Incorporation to the company. From the date of issuance of such Certificate, the LLP stands dissolved and all property, movable and immovable (including actionable claims), belonging to or vested in the LLP shall vest in the company.