Conversion of Partnership into LLP
Partnership firms are at a disadvantage when compared to the newly introduced Limited Liability Partnership (LLP) as they do not provide limited liability protection for the partners, separate legal entity status, ability to take on unlimited number of partners and ease of ownership transfer. The introduction of LLP’s through the Limited Liability Partnership Act, 2008 has made LLPs the premier choice for small and medium sized businesses.
- The firm should be registered as a partnership.
- There should be consent of all the partners.
- All partners should become partners in the LLP .
- Every partner should contribute to the LLP.
- DPIN (Designated Partner Identification Number) should be acquired for all the Designated Partners.
- DSC (Digital Signature Certificate) should be acquired for two designated partners.
Procedure for conversion
Obtain name approval for LLP (Limited Liability Partnership)
Application for conversion of firm to LLP in Form 17
File the following forms along with a statement by all partners with registration number and date of registration of the firm:
- Form 2: Details of partners, registered office etc.
- Form 3: LLP agreement – this can be filed within 30 days from the date of registration
- Form 4: Consent of Partners – Consent of each partner to become a partner of Liability Partnership
- After verification, registrar will register all documents and issue Certificate of registration. Upon registration of LLP, file intimation to the Registrar of Firms stating the fact that firm is converted into LLP.
On Conversion, all the partners of the partnership firm shall become partners of the LLP in the same proportion in which their capital accounts stood in the books of the Firm on the date of the conversion.
Up to date filing of Income tax returns.
Consent of all the unsecured creditors for the proposed conversion.
The partners receive consideration only by way of allotment of shares in LLP.
Minimum 2 Designated Partners.
At least 1 of the designated partners shall be an Indian Resident.
The Partners and Designated Partners can be same person.
There is no concept of share capital, but there has to be some sort of contribution from each partner.
DIN (Director Identification Number) for all the Designated Partners.
DSC (Digital Signature Certificate) for any one of the Designated Partners.