LLP to Private Limited Company Services in Ujjain

Several businesses started in India as Limited Liability Partnership (LLP), may now wish to convert into a private limited company for more growth in business or for infusing equity capital. An LLP can be converted into a Pvt. Ltd. company as per the provisions contained in Section 366 of the Companies Act, 2013 and Company (Authorised to Register) Rules, 2014.

However, there are various requirements which need to be satisfied for converting an LLP into a Private Limited Company, for instance, approval from all the partners is required, advertisement in newspaper is to be done in a local and a national newspaper, a No Objection Certificate (NOC) is required from the ROC where such LLP is registered.

Operating an Limited Liability Partnership form of business organization can be a hurdle as another form of business organization offers better opportunities for the growth & expansion of the business. Therefore, remarkable benefits offered by the other organizational structures will attract shareholders. Thus, that would lead to the conversion of LLP into a Private Limited Company.

Earlier it was not possible to convert an LLP into a private limited company. However, as per section 366 of the Companies Act, 2013, any partnership firm or LLP, cooperative society, or any other business entity which is incorporated under any other law and which has two or more members can get themselves registered as an unlimited company or as a company limited by shares or a company limited by guarantee.

1. LLPs do not have the concept of members. Hence, all the owners of an LLP would be a designated Partner in the LLP. This structure is not appropriate for Venture Capitalists and Private Equity Investors – who do not wish to actively participate in the management of the Company. Hence, equity holders will only invest in a Private Limited Company. Therefore, if the owners have plans for expanding the business by raising equity capital, then the entity must be registered as a private limited company.

2. Foreign Direct Investment (FDI) in a private limited company is under the automatic route whereas FDI in Limited Liability Partnership is under the approval route. Therefore, businesses that have foreign or NRI promoters opt for the incorporation of a private limited company.

3. Tax credit in respect of tax paid on deemed income relating to certain companies (i.e. MAT credit U/S 115 AA)

4. The penalty for non-compliance or late filing of documents with the Ministry of Corporate Affairs is most of the time higher for an LLP as a flat fee of Rs.100 per day is charged when the non-compliance continues with no cap on the liability. Therefore, LLPs could incur a huge penalty or fines from MCA due to non-compliance.

1. List of the members with various details viz. names, address, shares held by them appropriately, etc.

2. List of the first directors of the private company with various details viz. names, address, the DIN, passport number with an expiry date, etc.

3. An affidavit from every person proposed as first directors, that he is not banned to be a director under section-164 and all the necessary documents filed with the registrar for the registration of firm must contain information which is complete and correct & true to be best of his belief and knowledge.

4. A list including the names & addresses of partners of LLP and a copy of LLP agreement & certificate of registration duly verified by two designated partners of LLP must be enclosed.

5. A statement indicating the following specifications

6. The nominal share capital of firm & the number of shares into which it is separated

7. The number of shares taken & the amount paid for every share

8. The name of the firm, with the addition of word Limited or private limited is required.

9. A written consent or No objection certificate from all creditors.

10. Copy of newspaper advertisement, statement of accounts of the company which must not be 6 days preceding the date of the application and it must be duly certified by the auditor.