Conversion of Pvt Ltd to LLP, what are the guidelines

693 votes

When a private limited company is converted into LLP what are the implications on different registrations- VAT, ST, IEC and PAN

Ans: there is such procedure for converting a Limited company to LLP. The private Limited company has to be closed in accordance with law and a new LLP has to be opened, as the LLP is a partnership firm, whereas the company is registered under the companies Act.

Advocate Girish Kodgi LawRato

726 votes

Everything has to be changed and updated to have the LLP's name instead of the Company's. You have to surrender all the licenses and apply for fresh ones. There are certain methods which can be followed to get the registrations done expeditiously. Please feel free to get in touch should you require any legal assistance we have a team of lawyers/CA/CS working on these aspects.

Advocate Ayantika Mondal LawRato

740 votes

A Private Company may convert into LLP in accordance with the procedure prescribed in the Third Schedule. Process as given below:

OBTAIN DIN:
Earlier there was Concept of DPIN, which has been abolished therefore. Now obtain DIN for those designated partners who do not posses DIN already.

BOARD MEETING:
Call meeting of Board of Director.
Pass Resolution for Conversion of Company into LLP.
Pass Resolution to authorize any director to Apply for Name of LLP.
APPLICATION FOR NAME AVAIBILITY:
File e-form 1LLP with ROC.

Attach: Board Resolution passed by the Company approving the conversion into LLP shall be attached with the aforesaid form

DRAFTING OF LIMITED LIABILITY PARTNERSHIP AGREEMENT:
Main Contents of Agreement are:

Name of LLP
Name of Partners & Designated Partners
Form of contribution
Profit Sharing ratio
Rights & Duties of Partners
Proposed Business
Rules for governing the LLP
Drafting of LLP Agreement

LLP agreement has to be drafted in line with LLP Act. It is not mandatory to file LLP agreement at the time of registration and same can be file within 30 days of obtaining the Incorporation Certificate. Designated partners are responsible for doing all acts, matters and things that are required to be done for complying with the provisions of the LLP act. They are liable to all penalties imposed on the LLP. So it is very important to draft LLP agreement with professional help.

The following clauses are important to be incorporated in agreement:

Name, Object and Register Office of LLP
The initial Contribution of the LLP by Partners
Methodology of valuation of Non Monetary contribution
The net profits or losses sharing ratios
Detail of Designated Partners
Interest payable on Capital Loan prescribed u/s. 40(b) of the Income-tax Act, 1961
Remuneration payable to the working partners or as prescribed u/s. 40(b) of the Income-tax Act, 1961
Mode of operation of Bank Accounts
Maintenance of Book of Accounts
Appointment of arbitrator
Rights and Duties of Partners
Rights and Duties of Designated Partners
Indemnity clause
Goodwill clause
Procedure for change in name
Procedure to appoint Auditor
Admission of New Partner
Meeting
Cessation of Existing Partners
Winding up of LLP
Amendments of LLP
Extent of Liability of LLP
Liability of Partners in LLP
Ancillary or other business carried over by LLP
FILLING OF INCORPORATION DOCUMENTS:
File E-Form-2LLP with ROC along with following documents as ATTACHMENTS:

Proof of Address of Registered office of LLP.
Subscription sheet signed by the promoters.
(Notice of Consent & Appointment of Designated Partners with their personal details)
Detail of LLP(s) and/ or company(s) in which partner/ designated partner is a director/ partner
FILLING OF APPLICATION FOR CONVERSION:
File E-FORM-18 with ROC along with following documents as ATTACHMENTS:

Statement of shareholders.
Incorporation Documents & Subscribers Statements in Form 2 filed electronically.
Statement of Assets and Liabilities of the company duly certified as true and correct by the auditor.
List of all the Secured creditors along with their consent to the conversion.
Approval of the governing council (In case of professional private limited companies)
NOC from Income Tax authorities and Copy of acknowledgement of latest income tax return.
Approval from any other body/authority as may be required.
Particulars of pending proceedings from any court/Tribunal etc.
After all formalities and filings been complied with by the applicants and approved by the Ministry,REGISTRAR OF LLP TO ISSUE A CERTIFICATE OF REGISTRATION in form no. 19 as to conversion of the LLP. The Certificate of Registration issued shall be the conclusive evidence of conversion of the LLP.
FILLING OF E-FORM-3LLP:
This form provides information in respect to the LLP Agreement entered into between the partners.
ATTACH: LLP Agreement

Advocate Sadanand Naik LawRato