LLP to Company Conversion
LLP to company conversion, In certain jurisdictions, such as India, it is feasible to convert a Limited Liability Partnership (LLP) into a company.
The process of converting an LLP to a company typically involves the following steps:
1. Board Resolution:
The partners of the LLP must pass a board resolution approving the conversion and authorizing designated partners to undertake the necessary actions for conversion.
2. Obtain DIN and DSC:
The designated partners of the LLP to company conversion need to obtain Director Identification Number (DIN) and Digital Signature Certificates (DSC) if they don’t already have them.
3. Name Reservation:
Choose a new name for the proposed company and apply for name reservation with the Registrar of Companies (ROC).
The chosen name must adhere to the specified naming guidelines and should be distinct from any preexisting companies or trademarks.
4. Prepare Documents:
Prepare the necessary documents required for conversion, including Memorandum of Association (MOA), Articles of Association (AOA), consent of partners for conversion, declaration by partners, and other required forms and affidavits.
5. File Conversion Application:
File the conversion application with the ROC, along with the required documents and prescribed fees.
The application should include details such as the proposed company structure, shareholding pattern, and other relevant information.
6. Compliance and Approval:
Comply with any additional requirements or conditions specified by the ROC. The application will be examined by the ROC, and if all requirements are met, they will issue a Certificate of Incorporation for the newly converted company.
It’s important to note that the specific procedures and requirements for converting an LLP to a company can vary depending on the jurisdiction and the legal framework governing such conversions.
It is advisable to consult with legal professionals or company secretaries who are well-versed in the laws and regulations of your jurisdiction to ensure compliance and a smooth conversion process.
To visit https://www.mca.gov.in
FAQs
1. What is LLP to company conversion?
Ans: Converting an LLP (Limited Liability Partnership) into a company involves changing the business structure from a partnership model to a private limited company model under the Companies Act, 2013.
2. Why would an LLP want to convert into a company?
Ans: LLPs may convert to a company to benefit from features like easier access to capital, the ability to issue shares, and attracting investors who prefer company structures.
3. Is approval required to convert LLP to a company?
Ans: Yes, approval from the Registrar of Companies (RoC) is required. The LLP must file necessary documents and forms with the Ministry of Corporate Affairs (MCA).
4. Can all LLPs be convert into companies?
Ans: No, only LLPs that have at least 2 partners and no outstanding secured loans can apply for conversion into a company.
5. What forms need to be filed for conversion?
Ans: Key forms include Form URC-1 for registration, INC-32 (SPICe) for company incorporation, and INC-33/INC-34 for e-MoA (Memorandum of Association) and e-AoA (Articles of Association).
6. Will the LLP’s liabilities transfer to the company?
Ans: Yes, after conversion, all assets, liabilities, and obligations of the LLP automatically transfer to the company.
7. Does the LLP need to dissolve before conversion?
Ans: No, the LLP does not need to dissolve. The conversion process itself transfers the LLP into a company without winding up.
8. How long does it take to convert an LLP into a company?
Ans: The conversion process typically takes 20-30 days, depending on the completion of documentation and approvals.
9. Do the partners of the LLP automatically become directors of the company?
Ans: Yes, the partners of the LLP will become shareholders in the company, and they may also become directors if they meet the requirements under the Companies Act.
10. Are there tax implications in converting LLP to a company?
Ans: There are generally no direct tax implications if the conversion is done as per legal procedures. However, it’s recommend to consult a tax advisor for specific details related to the business.
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