In India, there are many businesses that started as LLP (Limited Liability Partnership) but now wants to convert it to the private limited company to taste the more growth in the business or might be forgetting the benefit of equity capital. According to the provisions of ‘Section 366 of the Companies Act, 2013’ and ‘Company (Authorised to Register) Rules, 2014’, the LLP businesses have the rights to convert into the company.
But there are certain requirements which must be fulfilled for an LLP to convert into a Private Limited Company. For example, there must be a minimum of 7 partners in LLP, approval from all the partners is mandatory, advertisement in the local and national newspaper must be done, A NOC (No Objection Certificate) is needed from the ROC in which the registration of LLP is done and all the given below incorporation process must be done-
Hold a meeting of the partners to take assent of majority of its members summoned for the purpose of registering the LLP under Section 366 of the Companies Act, 2013. To authorize one or more partners to take all steps necessary and to execute all papers, deeds, documents etc. pursuant to registration of the LLP as a Company.
After obtaining name approval, apply for Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the member of the LLP who will be the directors of the Private Limited Company after conversion. Note: In case of non-applicability of DIN, the applicant needs to provide address proof, identity proof and photographs along with the application. Therefore, obtain DIN directly through filing incorporation form.
On obtaining the approval of Name, file the Form URC-1 along with required documents with the registrar of Companies within 20 days from the date of name approval.
Company required filing e-form URC- 1 along with all the below mentioned documents:
1. A list showing the names, addresses, and occupations of all persons named therein as members with details of shares held by them.
2. a list showing the particulars of persons proposed as the first directors of the company.
3. an affidavit from each of the persons proposed as the first directors, that he is not disqualified to be a director us 164(1).
4. A list containing the names and addresses of the partners of the Limited Liability Partnership.
5. Copy of LLP Agreement.
6. a statement of assets and liabilities of the Limited Liability Partnership duly certified by a chartered accountant in practice which is made as on a date not earlier than thirty days of the filing of form no.URC-1.
7. a copy of latest income tax return of the Limited Liability Partnership.
8. an undertaking that the proposed directors shall comply with the requirements of Indian Stamp Act, 1899 (2 of “1899).
9. written consent or No Objection Certificate from all the secured creditors of the applicant.
10. written consent from the majority of Partners.
|Incorporation / Registration||Incorporated under provision of LLP Act, 2008||Incorporated under provisions of Companies Act, 2013|
|Minimum number of owners||2 Partners required||2 shareholders required|
|Minimum Number of Directors / Designated Partners||2 Designated Partners required||2 Directors required|
|Maximum number of owners||No such limit. An LLP can have any number of partners||200 is the maximum number of shareholders allowed|
|Capital Requirements||No Minimum capital requirements||No requirement of Minimum Authorised and paid up capital|
|Cost of Registration||Less when compared to Company||Cost of Registration depends on Authorised Capital and stamp duty on each state.|