Conversion of LLP to Pvt Ltd
The Ministry of Corporate Affairs published a notice permitting LLPs to become corporations on May 31, 2016.
Overview
An LLP may become a company under the terms of Section 366 of the Companies Act of 2013 and the Company (Authorized to Register) Rules of 2014, although this is not covered by the Limited Liability Partnership Act of 2008.
A growing number of Limited Liability Partnerships (LLPs) are converting to Private Limited Companies in order to increase development and expansion as well as to pump equity capital.
requirements for changing an LLP into a PVT LTD.
At least two partners are required for a limited liability partnership (LLP), and all partners must concur.
Benefits of Conversion of LLP to Pvt Ltd
- The concept of shareholders does not exist in LLPs. As a result, every LLP’s owner is a Partner in the LLP. This structure is not appropriate for Venture Capitalists and Private Equity Investors who do not want to be involved in the company’s management.
- Accepting Foreign Direct Investment (FDI) is quite easy in a company, as compared to LLP.
- Private limited company offers an Employee Stock Option Plan (ESOP), from which a company can offer shares to its loyal employees at a fixed subscription price over a period of time, such plans do not exist in LLP.
- Compliances for Private Limited Companies are high as compared to LLP, but that helps in recognizing it. Private Limited Company is the most recognized type of entity in India.
Checklist/Requirements
- All partners’ names, addresses, and occupations.
- A copy of the LLP agreement proving the partners’ identities and addresses.
- A copy of the Limited Liability Partnership’s most recent income tax return.
- Written approval from the majority of partners and a certificate of no objection from each secured creditor.
- An advertising from the newspaper.
Process of Conversion of LLP to Pvt Ltd
Step 1: Call a partner meeting.
Step 2: Publish newspaper notice in form URC-2
Step 3: Obtaining the approval of Name
Step 4: File the form No URC-1 & SPICe
Step 5: Issue Share Certificates to the members
Key Deliverables
- Incorporation certificate
- MOA and AOA
- Share Certificates
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