Conversion of an LLP into a Private Limited Company
The Limited Liability Partnership Act, 2008 has no provision related to the conversion of an LLP into a Private Limited Company, but Section 366 of the Companies Act, 2013 and Company (Authorised to Register) Rules, 2014 states that an LLP can be converted into a Private Limited Company.
LLP is good for small businesses with an annual sales turnover of fewer than Rs 40 lakhs and a capital contribution of fewer than Rs 25 lakhs. LLPs that satisfy these conditions do not have to go through an audit every year; on the other hand, a private limited company must conduct an audit of its financial statement each year. Though in case LLP has an annual turnover of Rs 40 lakhs or a capital contribution of more than 25 lakhs, the need for compliance becomes almost similar for both the private limited Company and LLP, making the owners of LLP think about converting into a Private Limited Company.
Reason for Conversion of an LLP into a Private Limited Company
The followings are the reasons for converting an LLP into a Private Limited Company:
- LLP converts into a private company for growth and to extend its existing business.
- LLP can attract only a few types of investors, so to attract more investors, such as foreign investors or equity investors, they go for conversion.
- The LLP is converting for issuing equity share capital in the private limited Company.
- To carry forward all the unabsorbed losses and depreciation of the last year.
- For continuing with the same brand name and goodwill of their LLP, the LLP decides to convert into a Company.
Benefits of Conversion of LLP into Private Limited Company
- Conversion of LLP into a Private Limited Company facilitates business entities to continue the brand name without making any further efforts on brand advertisements.
- In a Private Limited company there, 100% Foreign Direct Investment (FDI) is allowed; thus, any foreign investor (entity or person) can directly invest in the Company.
- After the conversion, no expenditure will be incurred on bookkeeping, as the losses and depreciation incurred in LLP will be carried forward on the conversion of the entity.
- Conversion of LLP to Private Company facilitates Companies to offer stock ownership and ESOP plans. Such plans help companies attract efficient employees, as it provides incentive plans for them to work in the Company.
- A Private Limited Company or Public Company can only raise funds from venture capitalists or angel investors, and if the company registration process is strict, it helps the company structure to be more credible, among others. This leads to easy fundraising from external sources.
- Conversion prohibits the liability of the owners only to the capital subscribed and unpaid by them.
- There is no capital gain tax in a private limited company.
- Existing LLP has just replaced by the Private Limited Company by adding the “Pvt. Ltd.” at the end of its name.
Process of Conversion of LLP into a Private Limited Company
Here are details of each step of the procedure required for the conversion of LLP into a Private Limited Company:
Advertisement in Newspaper
Advertisement shall be in Form No. URC-2, which shall be published in a newspaper in English and in any vernacular language, circulating in the district in which Limited Liability Partnership or the firm as the case may be is in existence and circulated in that district.
It is mandatory that the advertisement copy shall be served to the Registrar where the LLP is registered.
Filing Of Form URC-1
Proposed Name of Company is required to be entered in Form URC 1.The applicant is required to prepare and file Form No URC-1 along with the all required documents/information.
Securing DSC And DIN
It is necessary for all the directors of the Company to obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN). DIN can be obtained by filing an application form on the Ministry of Corporate Affairs portal. The Central Government approves the said application of DIN through the office of the regional director, the ministry of corporate affairs. Before submitting the form, make sure to self-attest it along with address proof and identity proof with one passport size photo of the applicant.
How S.K. Agrawal & Co. Helps in Conversion of LLP into Company?
With S.K. Agrawal & Co., you can convert your LLP into Company seamlessly. You can convert your LLP in just 4 simple steps:
Step 1: Confirmation Mail Acceptance of our Proposal
Send confirmation mail at our email id regarding acceptance of our Proposal for Conversion of LLP into Company. You can request a callback or directly call to our expert on phone number provided at our website. Our experts will contact you and clear all your queries.
Step 2: Send the Documents on our Email Id
Send below-mentioned documents on our email Id to convert your LLP:
- Passport size photos of directors
- PAN Card or Passport in case of NRIs and Foreign National
- Address proof of directors
- Specimen signature
- Self-declaration about your directorship in other Companies/LLP
- Rent agreement of your registered office
- No objection certificate from the owner of the property of the property
- Any other document/information required for conversion
The Conversion of LLP from S.K. Agrawal & Co. is completely online and thus, you can save time and money as you need not have to visit our office. If you want to visit to our office you are most welcome.
Step 3: Document Verification by our Expert Team and Signature of Documents
Our expert team will verify the documents uploaded by you. You will need to attest your signature on the documents.
Step 4: Our Experts Team will File Forms on the MCA portal to convert your LLP into Company
Our experts team will file the below e-forms on behalf of you on the MCA portal.
After the company forms are filed on the MCA portal, the Registrar of Companies (ROC) and the respective departments will verify the forms submitted by our expert team. The verification process takes around 5-7 days (subject to departmental approval and reverts from the respective departments).
Our expert team will follow up with the respective authorities till you receive the Incorporation Certificate. After the verification process is complete, you will receive the Certificate of Incorporation of Company in about 5-7 days.
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