Conversion of a Private Limited Company to a LLP

4.7 | 49+ ratings

The introduction of Limited Liability Partnership as per the provisions of the Limited Liability Partnership Act, 2008 proved to be a revolution as it combined the flexibility of a partnership and the benefit of having limited liability at a low cost of compliance. Being a hybrid corporate structure between a company and partnership firm, it is a separate legal entity where no partner is liable for the unauthorized action of another partner, and whose liability is restricted to his own stake in the LLP.

An LLP form of business also provides the advantage of fewer mandates such as non- applicability of dividend distribution tax on the profits, transfer of profit rules, MAT provisions, etc. Only two persons/ members are required for setting up an LLP. The  difference here being an LLP is that it does not have any maximum limit as to the upper limit of the membership whereas, Private Limited Company has an upper limit of two hundred members when it comes to the shareholders. LLP is a more beneficial business structure than a Private Limited Company as the compliance cost is less and the taxation is also minimal. 

Why go for conversion of a private limited company into a Limited Liability Partnership?

1. Separate Legal Entity and Limited Liability
An LLP is a separate legal entity and a juristic person established under the law. In an LLP, the liability of the partners is limited to the extent of the contribution/ investment made by the partner agreed in the LLP agreement.
2. Minimum Compliances
In an LLP, compliances are less as compared to a private limited company. There is no requirement of maintenance of statutory records in LLP, which is compulsory to maintain under private limited company as per the Companies Act, 2013.
3. Audit of  Accounts
Entrepreneurs earning a turnover of less than 40 Lacs and a capital contribution of less than 25 Lacs need not get their accounts audited, whereas, in a private limited company, an audit is compulsory.
4. Tax Advantages
There are some important advantages of an LLP over the private limited company. For example, Dividend Distribution Tax and Tax surcharge don't apply. Loans to partners are also not subjected to tax as income.
5. Flexibility
An LLP offers participants greater flexibility in the management of the business. Partners have full authority over how they will individually contribute to the business operations.

Minimum requirements for conversion of a Private Limited Company into a Limited Liability Partnership

  • Obtain Designated Partner Identification Number (DPIN)
  • Limited Liability Partnership (LLP) Agreement
  • Filing of incorporation documents
  • File Application for conversion
  • File Attachment with Application
  • Obtain certificate of incorporation

What is included in our package?

  • Designated Partner Identification Number (DPIN) for 2 Partners
  • Digital Signature Certificate (DSC) For 2 Partners
  • Selection and Availability of name for LLP
  • Fees of Registrar of Companies (ROC)
  • Agreement of Limited Liability Partnership(LLP)
  • PAN Card for Company

You May Also Want To Know

1. How Many persons are required for the incorporation of Limited Liability Partnership (LLP)?
   Ans. Minimum 2 individuals are required for the incorporation of Limited Liability Partnership.
2. Is an Audit compulsory in Limited Liability Partnership (LLP)?
    Ans. LLP whose turnover exceeds, in any financial year, Rs.40 Lacs or whose contribution exceeds Rs.25 Lacs shall be required to gets its accounts audited.
3. Who can become a partner in an LLP?
    Ans. Any individual or organization can become a partner in an LLP including Foreigners/NRI's. However, the person should be over 18 years of age and must have a valid PAN card.

4. What is an LLP Agreement?
    Ans. An LLP Agreement determines the mutual rights and duties of the partners as well as the rights and duties in relation to LLP. The LLP Agreement is required to be filled to Registered Office of LLP.
5. The Liability of Partners in LLP is limited to what extent?
    Ans. In an LLP, Liability of Partners is limited to extent of contribution agreed in the LLP Agreement.
6. Who cannot be a Partner in LLP?
    Ans. The following can be partners:    
    a. A corporation sole
    b. A corporate society
7. Who is a Designated Partner in LLP?
    Ans. Every LLP shall have at least two designated partners who are individuals and at least one of them shall be a resident of India.

8. What are the responsibilities of Designated Partner?
    Ans. The Designated Partners solely responsible for the management and execution of all the acts and things required to be carried out by the LLP including compliance of the provision such as annual filings, filings of documents and filings of statement as per the LLP Act.

Googling your legal issue online?

The internet is not a lawyer and neither are you.
Talk to a real lawyer about your legal issue.

Other legal services available

15 Minutes Corporate Law Advice Session by Phone

4.8 |153+ ratings
Legal advice and answers from a local experienced advocate about your ....
Create a Partnership Deed

4.6 |42+ ratings
30 Min Intro call + Start to finish help - Partnership Deed drafted by....
Document Review - Partnership Deed

4.9 |58+ ratings
Review + 30 Min phone call - Partnership Deed review by a local experi....