Overview
A Limited Liability Partnership (LLP) is often chosen by startups and small businesses for its flexibility, limited liability and fewer compliance requirements. However, as businesses grow and seek external funding, scaling or expansion, many entrepreneurs prefer to convert their LLP into a Private Limited Company (Pvt Ltd).
A Private Limited Company offers greater credibility, better regulatory recognition and wider financing options in India and abroad. The conversion is governed under Section 366 of the Companies Act, 2013 and the Companies (Authorized to Register) Rules, 2014 and requires approval from the Ministry of Corporate Affairs (MCA).
Why Convert LLP into a Private Limited Company?
1. Access to Funding – Pvt Ltd companies can raise equity funding from angel investors, venture capitalists and private equity firms, unlike LLPs.
2. Enhanced Credibility – Private Limited status improves brand image and credibility with clients, lenders and investors.
3. Separate Legal Identity – Provides a distinct legal entity with limited liability protection.
4. Scalability – Suitable for businesses planning large-scale operations or entering international markets.
5. ESOPs (Employee Stock Option Plans) – Pvt Ltd companies can issue ESOPs to attract and retain top talent.
6. Easy Exit Strategy – Provides smoother avenues for mergers, acquisitions or selling the business.
Types of Conversion
- Voluntary Conversion – Initiated by LLP partners when they meet eligibility requirements.
- Statutory Conversion – Rare, conversion mandated under specific legal provisions.
Note: Most conversions are voluntary under Section 366; “statutory conversion” is uncommon.
Eligibility for Conversion
- The LLP must have at least 2 partners, as a Pvt Ltd requires a minimum of 2 shareholders and 2 directors.
- Consent of all partners is mandatory.
- No secured creditors’ objections – If secured creditors exist, NOCs must be obtained; if none, a declaration must be filed.
- All partners of the LLP generally become shareholders in the Pvt Ltd company initially.
- The LLP must be compliant with all ROC filings (Annual Returns, Statements of Accounts, etc.).
- No pending legal proceedings should obstruct the conversion.
Process of Conversion
1. Obtain Digital Signatures (DSC) and Director Identification Numbers (DIN)
- For all proposed directors.
2. Name Approval
- File RUN (Reserve Unique Name) form or use SPICe+ Part A on the MCA portal.
3. Draft Documents
- Prepare Memorandum of Association (MoA) and Articles of Association (AoA).
4. Filing Conversion Application
- Submit Form URC-1 with MCA along with necessary attachments.
5. Public Notice
- Publish notice in one English and one vernacular newspaper where the registered office is located, inviting the objections from stakeholders.
6. Verification by Registrar of Companies (RoC)
- MCA scrutinizes documents and may request clarifications.
7. Issuance of Certificate of Incorporation (CoI)
- Upon approval, the RoC issues a fresh CoI; the LLP is officially converted into a Pvt Ltd company.
Documents Required
- Consent of all LLP partners
- Copy of LLP Agreement & Incorporation Certificate
- Statement of accounts (should be certified by a Chartered Accountant)
- List of partners and their consent to conversion
- Proof of registered office address
- Identity & address proof of all directors/shareholders
- No-objection certificate (NOC) from creditors (if applicable)
- MoA & AoA of the proposed company
- Affidavit from partners confirming compliance with requirements
Post-Conversion Compliance
- Update PAN, TAN, GST and bank accounts with the new company details.
- Inform clients, vendors and other stakeholders.
- Re-register licenses, permits and contracts in the new name.
- Maintain statutory registers and conduct board meetings as per the Companies Act.
- File annual returns and financial statements with MCA (Forms AOC-4, MGT-7).
Fees for Conversion
- Government filing fees (depends on authorized share capital)
- Professional charges for drafting, certification and filing (depending on complexity)
Timeline
- Preparation of documents: 5–7 working days
- Approval & incorporation by MCA: 15–25 working days
- Total conversion timeline: approx. 20–30 working days
FAQs
Yes. A notice must be published in both an English and a vernacular newspaper where the registered office is located, inviting objections from stakeholders.
Yes. A Chartered Accountant must certify the statement of assets and liabilities to ensure proper transfer of ownership.
Yes, provided the secured creditors give their No Objection Certificate (NOC) and charges are duly registered with the RoC.
All profits, reserves and losses are transferred to the Pvt Ltd company’s books and remain available for future use.
Yes, employment contracts should be updated in the name of the Pvt Ltd company, but benefits, tenure and continuity remain intact.
Yes. Stamp duty applies to the MoA and AoA, depending on state stamp laws and authorized share capital.
Yes, if approved by the MCA, but “Private Limited” must be added at the end.
The RoC verifies compliance, creditor protection and submitted documents, then issues the Certificate of Incorporation.
No. Once converted, an LLP cannot be reconverted into a Pvt Ltd through the same process.
Yes. PAN, TAN, GST and income tax records must be updated to reflect the new company details.
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