LLP to Private Limited Company Conversion

LLP to Private Limited Company Conversion: What It Means

Section 366 of the Companies Act 2013 read with the Companies (Authorised to Register) Rules 2014 permits the conversion of an LLP into a private or public limited company. The conversion preserves business continuity; all assets, liabilities, contracts and proceedings of the LLP vest in the new company on the date of conversion. The partners of the LLP become subscribers and directors of the new pvt ltd.

Why Founders Pick This Conversion Path

Indian venture capital and angel investors strongly prefer to deploy capital into private limited companies. The share based capital structure of a Pvt Ltd makes equity issuance, ESOPs, preference shares and exit mechanics cleaner than the partner interest structure of an LLP. Founders converting LLP to pvt ltd are almost always preparing for a funding round within the next three to six months. The conversion takes thirty five to fifty working days, which is the practical lower bound for setting a target close date with a lead investor.

Eligibility Criteria for This Conversion

• The LLP must have a minimum of seven partners for conversion under section 366
• Consent of three fourths of partners is required
• All partners must agree to become subscribers of the new pvt ltd
• At least one director of the new pvt ltd must be an Indian resident
• Newspaper publication of intent to convert is mandatory

Documents Required for the Conversion

Step by Step Conversion Process

1. Partner Consent and Special ResolutionThree fourths of partners pass a special resolution agreeing to convert the LLP into a pvt ltd. The resolution names the directors of the new company.
2. Newspaper PublicationA notice of intention to convert is published in two newspapers, one English and one vernacular, inviting objections from creditors within twenty one days.
3. Name Reservation Through SPICe+ Part AThe proposed name for the pvt ltd is reserved. Often the LLP name is retained with the suffix changed from LLP to Private Limited.
4. File URC 1 With SPICe+ Part BURC 1 is the conversion specific form. It is filed along with SPICe+ Part B, MOA, AOA, INC 9 declarations, statement of assets and liabilities, list of partners and creditor consents.
5. Certificate of IncorporationThe ROC issues a fresh Certificate of Incorporation. The pvt ltd is now legally born with its CIN, PAN and TAN.
6. File for LLP ClosureWithin fifteen days of the new pvt ltd incorporation, file the closure of the LLP through Form 14 with the Registrar.

Government and Professional Fees for the Conversion

ROC government fee on authorised capital, state stamp duty on MOA and AOA, and our professional fee. Our flat package covers URC 1 and SPICe+ filings, MOA and AOA drafting, partner resolutions, newspaper publication coordination, post conversion handover and LLP closure filings. Request a callback for an itemised view of LLP to private limited conversion fees applicable to your state.

Frequently Asked Questions