Overview

The Limited Liability Partnership (LLP) is a modern business structure that merges the benefits of a private company and a traditional partnership. It provides limited liability protection to partners while allowing flexibility in internal management.

Many private limited companies choose to convert into LLPs to reduce compliance costs, enjoy tax efficiency and simplify decision-making.

The process of conversion is governed by:

• Section 56 and the Third Schedule of the LLP Act, 2008 and
• Relevant provisions of the Companies Act, 2013.

On conversion, all assets, liabilities, contracts, rights and obligations of the company automatically vest in the LLP and the company is deemed dissolved.

Why Convert a Private Limited Company into LLP?

1. Reduced Compliance – LLPs face fewer statutory filings compared to companies.
2. Tax Efficiency – LLPs are not subject to Dividend Distribution Tax (DDT). Profits are taxed only in the hands of partners.
3. Operational Flexibility – Partners have greater freedom in managing the LLP internally.
4. Cost Savings – Lower cost of compliance, filings and audit (in some cases).
5. Limited Liability Protection – Partners’ liability is limited to their agreed contribution.
6. Perpetual Succession – The LLP continues irrespective of changes in partners.

Types of Conversion

• Private Limited Company → LLP – All shareholders of the company must become partners of the LLP.
• Unlisted Public Company → LLP – Permissible under the LLP Act, provided the company is not listed on a stock exchange.

Eligibility for Conversion

A Private Limited Company can convert into an LLP if:

• It has no security interest (charge/encumbrance) on its assets.
• All shareholders become partners of the LLP (and no one else).
• The company has at least two shareholders.
• The company is not listed on a stock exchange.

Process of Conversion

1. Board Meeting – Pass a special resolution approving conversion.

2. Shareholders’ Consent – Obtain approval of all shareholders.

3. Name Reservation – Apply through MCA portal (RUN-LLP or integrated in Form FiLLiP).

4. Digital Signature Certificates (DSC) – Obtain DSC for proposed designated partners.

5. Filing of Forms –

• Form FiLLiP – Incorporation of LLP (with partner details).
• Form 18 – Application for conversion from company to LLP, with required attachments.

6. Registrar Verification – ROC scrutinizes and may seek clarifications.

7. Certificate of Registration – Issued by ROC upon successful conversion.

8. Filing LLP Agreement (Form 3) – Must be filed within 30 days of incorporation.

9. Intimation to ROC (Form 14) – Notify the earlier Registrar of Companies within 15 days of conversion.

10. Post-conversion disclosure – For 12 months, all correspondence of the LLP must mention that it was converted from a Private Limited Company, along with the company’s CIN.

Documents Required

• Incorporation documents of the company.
• Consent of all shareholders.
• Latest audited financial statements.
• Statement of assets & liabilities certified by a CA (not older than 30 days).
• Copy of special resolution & board resolution for conversion.
• Proof of registered office (rent agreement/ownership deed & utility bill).
• Identity & address proofs of all designated partners.

Post-Conversion Compliance

The LLP must:

• Update PAN, TAN, GST, bank accounts and licenses with new LLP details.
• File and execute the LLP Agreement (Form 3).
• Maintain statutory books and records.
• Update stationery (invoices, letterheads, signboards, etc.).
• For the first 12 months, mention on all official documents that it was converted from a Private Limited Company.
• File annual return (Form 11) and Statement of Accounts & Solvency (Form 8).

Fees Involved

• Government Fees – Depend on the nominal capital / contribution.
• Stamp Duty – Payable on LLP Agreement (varies by state).
• Professional Fees – Payable to CS/CA/consultants assisting in filing.

Timeline

Normally 15–30 working days, subject to government approval and readiness of documents.

FAQs