Conversion of Firm Into LLP

Overview

Partnership firm comes under the unregistered organization and LLP is a registered form of organization. Most of Partnership firm converted into LLP because it has separate legal identity, liability protection, unlimited partners and is having combined features of a partnership as well as companies etc. which make it attractive than Partnership firm

On the conversion of Partnership into LLP, all properties inclusive tangible (movable and immovable) and intangible property vested in the firm, assets, interests, rights, privileges, liabilities, obligations of the partnership firm are transferred to the LLP. In other words, the complete undertaking of the firm is transferred to the LLP. However, any approvals, permit, registration or license issued to the Partnership Firm will not be transferred automatically to the LLP and hence fresh licenses or registrations is required to be applied by LLP.

Procedure for Conversion of Firm Into LLP

• Step I : OBTAIN DPIN & DSC - All partners is required to obtain DPIN and DSC for conversion of partnership firm into LLP.
  • Acquire Digital Signature (class 2) of the proposed designated partners (Atleast 1 DSC is required for Signing the Application)
  • Designated partner if does not hold DIN then will be allotted through filling Fillip form (Maximum 2) and for rest(if any ) separate application is required for obtaining DPIN.
• Step II : Approval of Name - Partners should apply to get the name approval in Form RUN to Registrar.
• Step III : File Fillip form - File Form FiLLiP i.e. form for incorporating LLP with other below mentioned forms and documents with the Registrar of Companies :
  • Proof of registered office address of LLP
  • Subscribers’ sheet including consent
  • Proposed Main Object clause
  • Approval of regulatory authority, if required
  • Detail of LLP and/ or company in which partner/ designated partner is a director/ partner (if any).
• Step IV : Filing of Application for conversion - Apply for conversion of firm into LLP in form 17(Application and Statement for the Conversion of Partnership Firm into Limited Liability Partnership (LLP) to the ROC along with the required documents.
  Following documents should be attached with form 17:
  • Copy of acknowledgement of latest income tax return (Mandatory)
  • Statement of Assets and Liabilities of the firm duly certified as true and correct by the auditor/chartered Accountant
  • List of all the secured creditors along with their consent.
  • Statement of consent of all partners in firm.
  • NOC from Tax Authorities
  • Any other information can be provided as an optional attachment.
• Step V : Certification of Registration -
  • Registrar after satisfying himself about completeness in documents and various compliances, issue certificate of incorporation in the name of LLP.
  • In case of any discrepancies found in the form, then it is needed to be resubmitted and uploaded again with satisfying the remarks by MCA.
• Step VI : Post incorporation compliance - Filing of form 3 within 30 days of the incorporation of LLP along with attachment of signed and stamped, notarized LLP Agreement .
• Step VII : Intimate Registrar of Firms -
  • After receiving Certificate of Incorporation of LLP, the LLP is required to file form 14 with the Registrar of Firms within 15 days of registration of LLP for intimating about its conversion into LLP and particulars of LLP.
  Following document should filed along with this form:
  • Copy of the certificate of incorporation of LLP is a mandatory attachment.
  • Any other information can be provided as an optional attachment.
  In case of a refusal of registration by the Registrar, an appeal can be filed with the tribunal.

Documents & Information Required

• PAN Card and Aadhar card (Mandatorily Required) of the Partners/Designated Partner
• Identity Proof of the Partners/ Designated Partners (Voter id/ Driving License/ passport-anyone)
• Address Proof of the Partners/ Designated Partners( Self attested Latest Electricity Bill / Telephone Bill / Mobile Bill / Bank Statement with latest entries(any one)
• Electricity Bill of the proposed Registered Office of the LLP (In case of owned)
• No-Objection Certificate from the Landlord, electricity bill and Rental Agreement Copy between the LLP and the Landlord (In case of Rented Office)
• Subscriber Sheet
• Consent of designated partner
• DSC of designated partners
• Name of Proposed LLP
• Capital of Proposed LLP and capital Contribution of Proposed Partners
• Phone No. and E-Mail Id of Proposed Partners

Minimum Requirement for Conversion

• The partnership firm must be registered according to Indian Partnership Act, 1932.In case firm is not registered under the same act then the name of the Statute under which it is registered required to be mentioned at the time of conversion.
• Consent of all partners should be given for the conversion.
• The LLP must consist of same number of partners as they were in partnership firm.
• The partners cease to be a partner if they are not willing to continue with the LLP and in case any new partner is required to be added, then they can be added only after completion of process of conversion and LLP is formed.

Effects of Conversion of Firm into LLP

Following are some of the effects of conversion of Firm into LLP:

• The partnership firm shall stand dissolved on its conversion into LLP and An LLP come into existence with name specified in the certificate of registration.
• All the asset ,liabilities, obligations, rights, contracts,agreement, privileges etc. of the firm shall not be affected due to its conversion and same shall be vest or continued in LLP.
• The name of the firm shall be removed by Registrar of Firms from Register after receiving intimation of conversion.
• Every partner will be jointly and severally liable for all the liabilities and obligations of the firm arising out of business conducted as a partnership firm before conversion.In case any partner discharges the obligation, then he shall be indemnified by the LLP.
• All the pending proceedings by or against the firm before any court or Tribunal shall be continues by or against the LLP.
• LLP shall for the period of 12 months from the date of conversion, mention the statement that it was converted from firm into LLP and Name and registration number of the firm from which it was converted in all official correspondence.
• Any order or judgement whether in favour or against the partnership firm applies against the LLP.
• Any approvals, permit, registration or license issued to the Partnership Firm will not be transferred automatically to the LLP and hence fresh licenses or registrations is required to be applied by LLP.
• If any property registered on name of partnership then it is required to approach concerned authority for the purpose of transferring the same to the name of LLP.