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Conversion of Private Limited company to LLP

The LLP organization combines the advantages of a partnership and a corporation. The characteristics of being a separate legal body with limited responsibility do not alter. Furthermore, apart from LLP, partners have direct control over their activities, unlike a private corporation where the director is in charge of operations and management. As a result, the company enjoys additional operational flexibility by converting to an LLP.

The LLP is governed by the LLP Agreement signed by the partners. It has fewer regulatory restrictions and is simpler to use. It keeps the benefits of cooperation while also providing a company with protection and trustworthiness. The Ministry must approve converting a private limited company to an LLP via an online application that includes all relevant papers.

The Impact of Converting a Pvt Ltd Company to an LLP

The following are some of the consequences of converting a corporation to an LLP:

1. After conversion, the private limited company is dissolved, and the name of the private limited company is deleted from the ROC's record..

2. Existing responsibilities, commitments, agreements, contracts, and employment will not be affected by the conversion.

To convert a Private Limited Company (Pvt Ltd Co.) to an LLP, the following conditions must be met

Step 1.

Every member in the organization must approve of the conversion option.

Step 2.

The LLP will have all of the members of the Private Limited Company as partners.

Step 3.

The Registrar of Companies must receive the most recent copy of your income tax return.

Step 3.

The conversion must be approved by all of the private company's creditors, not just the members.

Step 4.

According to the Companies Act, no trial should be initiated until the process has been completed.

Documents Required

  • A certified copy of the financial statement.
  • A copy of the firm's ITR.
  • Passport Size Photograph.
  • PAN Card.
  • ID Proof (anyone).
  • Aadhar Card/Voter ID /Driving License /Passport.
  • Address Proof.
  • Bank Statement/Electricity Bill /Telephone Bill / Mobile Bill.

Documents for Registered Office Address

  • If Property Owned by Directors /Shareholder.
  • Sale Deed of Property.
  • NOC from the Owner (format given by our company).

If you've rented a property, you'll need a letter of authorization from the owner (format given by our company)

  • Rent Agreement.
  • Sale Deed of Property.
  • NOC from the Owner (format given by our company).

Advantages

Rewards and returns to partners

The LLP's partners get various benefits, including revenue, a profit share, and interest on capital. The pay is paid in response to partners' direct involvement. On the other hand, the profit share is a share of the profit generated by business activity.

Independent liability

No partner is liable for the acts of other partners who are not permitted. As a result, individual partners are protected from joint liability due to another partner's bad business decisions or wrongdoing.

Less statutory compliance

There are strict limits to a Private Limited Company. A limited liability partnership (LLP) is not bound to maintain statutory registries and records as compare to private limited company.

Flexibility in operations

The partners are heavily active in the day-to-day operations and management of LLP. LLPs, unlike corporations, are governed by an LLP Agreement, which all partners sign.

Separate Legal Entity

In the viewpoint of the law, an LLP benefits from Separate Legal Identity, which establishes that the business' assets and liabilities are not the Partners' assets and liabilities.

Lower Registration cost

The cost of forming an LLP is significantly less than that of creating a public limited company or a private limited company. Through TaxDraw, you can register an LLP.

No Limit on owners of the business

A limited liability partnership (LLP) requires a minimum of 2 partners, but there is no limit to the number of partners. A private limited company, on the other hand, cannot have more than 200 members.

FAQ's

A limited liability partnership (LLP) is a separate legal entity from its partners. A limited liability partnership (LLP) has an indefinite succession. An LLP is governed in India by the Limited Liability Partnership Act, 2008 ("LLP Act") and its rules.

To form an LLP, you'll need at least two partners.

When a firm, private company, or unlisted public corporation is converted into a limited liability partnership, under his seal, the Registrar provides a Registration certificate in Form 19.

If the Registrar declines the registration, the applicant firm, private company, or unlisted public company, as the case may be, has sixty days from the date of receipt of the refusal notice to apply with the Tribunal.

Persons who become partners by and in compliance with the limited liability partnership agreement are eligible to become partners of a limited liability partnership firm, according to Section 22 of the Act.

According to Section 34 of the Act, the LLP must keep books of accounts for each year of its existence on a cash or accrual basis, using the double-entry accounting system. The LLP must keep its records of funds for a period of eight years at its registered office.

Is it necessary for all creditors to agree to a conversion?

Yes, all creditors must agree to the company's conversion into an LLP.