An LLP is a supple business structure ideal for small businesses and start-ups as it has least compliance requirements and is a partnership-based model. However, as a business nurtures and seeks to raise capital or expand its operations, converting into a Private Limited Company becomes beneficial. A private limited company permits greater access to funding through shareholders, limited liability protection, increased credibility and clear ownership.
The process of conversion of an LLP into a private limited company is governed under Section 366 of the Companies Act, 2013. To become eligible for conversion, the LLP is required to have at least seven partners and must also obtain a No Objection Certificate (NOC) from all its creditors. Once transformed, the company enjoys a separate legal identity, perpetual succession and a more organized corporate structure, which is necessary for expansion and compliance with legal standards.
Even though this process consist of many legal and procedural steps, it eventually sites the business for greater growth and investment opportunities. This change will not affect the LLP's existing assets, liabilities or contracts, as will confirm seamless transition as well as a continued operations under the new corporate identity.
The Legal Provisions for converting the LLP into a private Limited Company?
Law or Form | Particulars |
Law | Section 366 of the Companies Act, 2013 |
Form URC-2 | Format for Newspaper Publication |
RUN | For filing Name Reservation Application |
Form URC-1 | Application for Conversion from LLP to Company |
Spice+ Form | For new Company Certificate of Incorporation |
DIR-2 | Consent of Directors |