Conversion of Partnership to LLP
Limited Liability Partnerships have more priority over the general partnership structure as it is much more beneficial for the partners. It is a business structure that integrates the advantages of the company’s corporate structure and the flexibility of the partnership. The conversion of a partnership firm to LLP shall be as per Section 55 of the Limited Liability Partnership Act 2008 read with Schedule II of the Act.
Features of a Partnership
A Partnership firm is governed by the principles of the Indian Partnership Act, 1932. The following are the essentials features of a partnership:
An association or agreement between two or more individuals to share the profits and losses of a particular business or a venture.
There is a separate legal document known as a partnership deed where the profit sharing ratios of the partners are specified.
There is no form of limited liability status enjoyed by the partners of a partnership firm. Hence conversion of partnership to LLP would be an ideal choice, if the partners want limited liability status and more flexibility.
Benefits of Conversion of Partnership to LLP
More Investment
Conversion of partnership to LLP would improve the amount of investment in the LLP. Through the process of conversion, the reputation of the entity would increase making more amounts of investors invest in the LLP.
Perpetual Succession
The exit or death of a partner does not result in the dissolution of the partnership firm. The principle of perpetual succession would be applicable to the LLP.
Limited Liability
Conversion of partnership to LLP would automatically grant the status of limited liability to the partners. Limited liability would afford some form of independence to the partners of the firm. Limited liability separates the liability of the partners from the firm.
Management Decision
Conversion of partnership to LLP increases the amount of flexibility and decision making process in a LLP when compared to a traditional partnership firm.
Foreign Direct Investment
The government of India has relaxed the regulations related to the FDI in an LLP. There is leniency for FDI in an LLP when compared to a partnership.
Eligibility Criteria for Conversion of Partnership to LLP
The partnership firm must be registered under Indian Partnership Act, 1932. If the firm is not registered under Indian Partnership Act, 1932 then the name of the Statute under which it is registered has to be mentioned at the time of conversion.
Documents for Conversion of Partnership to LLP
Identity and Address Proof
- Photograph of all the Partners
- PAN Card of all the Partners
- ID Proof of all the Partners (Driving License/Passport/Voter ID)
- Electricity Bill or any other utility bill for the address proof of the Registered Office
Registered Office Proof
In may be noted that for Indian nationals, PAN is mandatory and for foreign nationals apostilled documents would be required. Documents like bank statement or electricity bill should not be older than 2 months. Along with that utility bill, rent agreement or sale deed and a No Objection Letter (NOC) from the landlord with his/her consent to use the office as a registered office of a company must be submitted.
Procedure for Conversion of Partnership to LLP
- Requirement of Digital Signature: Partners in a Partnership Firm shall necessarily have Digital Signature as it will be required for filling up of various Forms. So the Partners shall make arrangement to obtain Digital Signature.
- Requirement of DIN or DPIN: DIN(Director Identification Number) is a unique number issued by the Central Government. This number is issued to a person only once and can be used by the person throughout his life.
- Name Approval:After the DIN availability process is over, person can apply for the Name reservation of the proposed LLP through Ministry of Corporate Affairs. The Reservation of the name of the LLP must be obtained before filing the forms for conversion of the Partnership Firm into LLP.
- Filling of Form-Fillip:Form for Incorporation of Limited Liability Partnership. If the partners does not have DIN we can apply for application of DIN (Maximum 2) in the Form- Fillip.
Documents and information required for Form- Fillip:
i) Name of Proposed LLP
ii) DSC of Designated Partners
iii) Capital of Proposed LLP and Contribution of Proposed Partners
iv) Phone No. and E-Mail Id of Proposed Partners
v) Voter Id Card/Driving Licence/Passport of Proposed Partners
vi) Latest Utility Bill (Not Older Than 2 Months)(for Registered Office)
vii) Registered Office Proof (Index-2/ Allotment Letter/ Possession Letter/ Sale Deed/ Rent Agreement)
viii) PAN of all Designated Partners/ partners
ix) Bank Statement of Designated Partners/ partners
Attachments for Form Fillip:
- Subscriber Sheet Including Consent.
- Proof of Address of Registered Office of the LLP which includes NOC of the Owner.
- Proposed Main Object.
- Details of LLP or Company if the proposed Designated Partner /Partner is Director or Partner of any other Company or LLP respectively.
- Filling of Form-3: Information with regard to limited liability partnership agreement and changes, if any, made therein.LLP Agreement has to be attached in form-3.
- Filling of Form-17: Application and a Statement of the Conversion of Partnership Firm into LLP (Limited Liability Partnership) i.e., Form 17. This form includes a Declaration by a Partner of the Parnership Firm and shall be Digitally Signed by a Partner and Certified by a Company secretary in whole time practice/Chartered accountant in whole time practice/ Cost accountant in whole time practice
Attachments in Form-17:
- Statement of consent of partners of the firm.
- Statement of Assets and Liabilities of the firm duly certified as true and correct by the Chartered Accountant in practice.
- Copy of acknowledgement of latest income tax return.
- List of all the secured creditors along with their consent to the conversion.
On successful conversion of Partnership firm into LLP, the Registrar would then issue a Certificate of Incorporation of LLP and all the properties, assets, interests, rights, privileges, etc. of the firm are now transferred to the LLP.
- Intimate Registrar of Firms
In the final step, the partners of the LLP have to intimate the Firms about the change of status of the partnership to LLP. Form 14 must be submitted to the Registrar within 15 days of this process.
Our Blog
PSARA LICENSE – Estabizz Fintech
GST DUES ( VOID PROPERTY TRANSFER ) -Estabizz Fintech
GST ( INSTALLMENT & RECOVERY ) – Estabizz Fintech
SEBI ( Surveillance of Transaction Alerts) – Estabizz Fintech
RESERVE BANK OF INDIA (Rules for payment companies outsourcing core activities) -Estabizz Fintech
RESERVE BANK OF INDIA( Guidelines for Appointment of Statutory Auditors of Banks, NBFCs) -Estabizz Fintech
RESERVE BANK OF INDIA ( Deadline for Current Account Notification) – Estabizz Fintech
RESERVE BANK OF INDIA ( Treatment of Inactive Trading account) -Estabizz Fintech
SEBI revises financial info filing formats for entities having listed non-convertible securities
SEBI notifies certification requirements for distributors, staff of portfolio management services
SEBI extends relaxations for compliance with rights issues.
SEBI extends relaxations for compliance with rights issues
SEBI extends deadline for investment advisers to conduct annual compliance audit
SEBI board okays steps to make M&As easier
SEBI proposes to revise settlement rules
SEBI approves framework for creating Social Stock Exchange
