Introduction

A Limited Liability Partnership (LLP) is easy to manage and requires fewer compliances. However, as businesses grow, many owners prefer converting the LLP into a Private Limited Company to gain better credibility, attract investors, and expand operations.

The conversion of an LLP into a private limited company is governed by Section 366 of the Companies Act, 2013 and the Companies (Authorized to Register) Rules, 2014. Moreover, businesses must complete the entire process through electronic filing on the MCA V3 portal.

Legal Framework for Conversion

The conversion of an LLP into a private limited company is regulated under the following provisions:

Section 366 of the Companies Act, 2013
Companies (Authorized to Register) Rules, 2014

Under these provisions, an existing entity such as an LLP can register itself as a company with the Registrar of Companies (ROC). As a result, the entity continues its business in the form of a company after completing the conversion process.

Eligibility and Pre-Requisites

Before starting the conversion process, the LLP must meet certain conditions.

1. Minimum Number of Partners

First, the LLP must have at least two partners, because a private limited company requires a minimum of two shareholders.

2. Compliance Status of LLP

Next, the LLP must ensure that it is fully compliant with statutory filings, particularly:

Form 8 – Statement of Accounts and Solvency
Form 11 – Annual Return

If the LLP status is defunct or under liquidation, the Registrar will not allow the conversion.

3. Consent of Partners

In addition, all partners must give their written consent for the conversion. This requirement ensures that every partner agrees to the structural change.

4. No Objection from Creditors

Furthermore, if the LLP has secured creditors, it must obtain a No Objection Certificate (NOC) from them before starting the conversion process.

Step-by-Step Procedure for Conversion

1. Name Reservation through SPICe+ (Part A)

First, apply for the proposed company name through SPICe+ Part A on the MCA portal.

In many cases, the LLP can retain its existing name by replacing “LLP” with “Private Limited.” However, the proposed name must comply with the MCA naming guidelines.

2. Newspaper Advertisement (Form URC-2)

Next, publish a public notice regarding the proposed conversion in the following newspapers:

One English newspaper
One vernacular newspaper in the district where the registered office of the LLP is located

After publishing the notice, the LLP must allow 21 clear days for the public to raise objections, if any.

3. Filing of Form URC-1

After the notice period ends, the LLP must file Form URC-1, which serves as the main application for registering the LLP as a company.

The application must include the following important attachments:

Statement of Assets and Liabilities certified by a Chartered Accountant and prepared within 15 days of filing
List of partners showing their proposed shareholding in the company
Affidavits from partners confirming the dissolution of the LLP
Affidavit from proposed directors confirming their eligibility under Section 164 of the Companies Act
Copy of the newspaper notice (URC-2)

4. Filing Incorporation Forms (SPICe+ Part B)

After filing URC-1, the applicant must complete the incorporation process by filing the required forms.

SPICe+ Part B

This form is used for the incorporation of the company.

MOA and AOA

The Memorandum of Association (MOA) defines the objectives and scope of the company.
The Articles of Association (AOA) define the internal rules and management structure of the company.

AGILE-PRO-S

Additionally, the AGILE-PRO-S form allows the company to apply for multiple registrations simultaneously, including:

GST
EPFO
ESIC
Professional Tax
Opening of a bank account

INC-9 Declaration

Finally, the INC-9 declaration must be filed by the subscribers and first directors, confirming that they comply with the requirements of the Companies Act.

Required Document Checklist

LLP Documents

Certificate of Incorporation of LLP
LLP Agreement and supplementary agreements

Financial Documents

CA-certified Statement of Accounts
Latest Income Tax Return acknowledgement

Identity and Address Proof

For all directors and shareholders:

PAN card
Aadhaar / Passport
Address proof
Registered office proof and utility bill

Legal and Consent Documents

Written consent of all partners
NOC from secured creditors
Newspaper publication copies (URC-2)

Post-Conversion Compliances

After the Certificate of Incorporation (COI) is issued, the LLP officially becomes a Private Limited Company. However, the company must complete several compliances.

1. Filing of INC-20A

First, the company must file the Declaration of Commencement of Business (INC-20A) within 180 days of incorporation.

2. Transfer of Assets and Liabilities

Next, all assets and liabilities of the LLP automatically transfer to the company. However, the company should update its internal records, agreements, and ownership details.

3. Update Statutory Registrations

After conversion, the company should update the following registrations:

PAN
TAN
GST registration
Bank accounts

Additionally, the company must begin using its Corporate Identification Number (CIN) in all official documents.

4. Intimation to Registrar of LLP

Finally, the company must inform the Registrar of LLPs about the conversion so that the LLP can be formally dissolved in the records.

Conclusion

In conclusion, converting an LLP into a private limited company allows businesses to adopt a stronger corporate structure and better growth opportunities. The process involves meeting eligibility conditions, publishing a public notice, filing Form URC-1, and completing incorporation through SPICe+ forms on the MCA V3 portal. Once the Registrar of Companies approves the application and issues the Certificate of Incorporation, the LLP officially becomes a private limited company and continues its operations under the Companies Act.