Conversion Of Partnership Firm Into Limited Liability Partnership Firm

In recent years, many entities have been registered under the LLP Act. This might be in the form of conversion or a totally new registration. Several reasons motivate the entities to make such decisions. LLPs provide more flexibility and freedom with regard to management, and also easily attract foreign investors to invest in the company. There is a perpetual succession for the company despite any partner leaving the company due to death or any other reason.

This article discusses the procedure and the documents or other necessary steps that a Partnership Firm should follow when it wants to convert into an LLP.

Conditions for Converting a Partnership Firm to LLP

1. Partnership Firms should be registered under the Partnership Act of 1932.
2. The conversion shall have complied with section 55 of the LLP Act.
3. The partners of the Partnership Firm should be the partners of the LLP, and there should be no addition or elimination of partners. Any such changes of partners can only be made after the completion of the conversion.
4. Before a conversion application is made, all the partners of the Partnership Firm should have a valid DSC (Digital Signature Certificate), and at least two partners should have a DPIN (Designated Partner Identification Number).
5. All partners should provide their consent for such conversion before any procedure for the same has been taken.

Procedure for Conversion

The firm should follow the following steps to convert into an LLP:

Step 1: Name Approval and DSC

The firm that wants to convert into an LLP should first register on and then log in to the MCA Portal.
Once logged in, under the MCA Services tab, select the option ‘RUN-LLP’, where RUN stands for ‘Rese’ve Unique Name.

Now, the option ‘Conversion of Firm into LLP’ should be chosen from the dropdown list. Here, you can give two proposed names for the LLP. If there are any supporting documents pertaining to the same, they should also be uploaded in PDF format.

Once this is done and the ‘Submit’ button is clicked, he will be led to the payment page, where a nominal government fee should be paid.

The validity of the name proposed shall stand valid for 90 days.

DSC
The designated partners must hold valid DSCs in their name, as every e-form pertaining to the conversion requires DSCs to be affixed.

Step 2: Filing of the Forms with the ROC

Form 17 – Application and Statement for Conversion of Partnership Firm to LLP

The applicants should first complete the Service Request Number (SRN) of the RUN-LLP Form that was issued when filing the proposed names.

The proposed LLP’s name should be given as LLP with the partnership firm’s name, address, registration firm, and partnership agreement details.

The details of all the partners of the Partnership Firm, along with the amount of capital contributed by each of them, should also be furnished here. The Partnership Firm should also provide the details of the Secured Creditors.
The attachments to be furnished with the form include the following:

1. Statement of Consent of the Partners,
2. Statement of Assets and Liabilities of the firm certified by a Chartered Accountant (CA) in practice,
3. Latest Income Tax Return (ITR) Acknowledgments,
4. List of secured creditors of the firm, along with their consent regarding the same,
5. Other additional information is required (option).

Form FiLLiP – Incorporation of LLP

The details that should be furnished here are, firstly, the details of the RUN-LLP form (auto-fil), along with the registered office details and the LLP’s email ID. Then, the details of the LLPs of the office of the registrar, the nature of the business activities, the details of partners and designated partners, along with their DPINs, DINs, and PANs, should also be provided. The capital contribution made by each of the partners should also be included.

Specific attachments should be made along with this form, and the same have been listed hereunder:

1. Proof of Address of the LLP office,
2. Consent of the subscribers,
3. NOC (No Objection Certificate) from the owner of the property, along with utility bills, which should not be older than 2 months.
4. Approval from any Regulatory Authority as required,
5. If the Designated Partner is a director or partner in another LLP or Company, then the details of such entities should also be furnished.
6. If the LLP’s name resembles that of any other existing Company or LLP, an NOC from such entity should also be obtained and attached herewith.
7. Capital of Proposed LLP and contribution made by each partner,
8. Voter ID/Passport or such other details of the Proposed Partners,
9. PAN of all Designated Partners or other partners,
10. Bank Statement of the Designated Partners or other partners,
11. Propose the main object of the LLP.

Both the forms mentioned above should now be e-signed by all the partners and certified by the Cost Accountant, Company Secretary, Chartered Accountant, or any of the persons specified and who are in Whole-Time Practice. The fees pertaining to these forms will change with respect to the total capital contribution.

Step 3: Issue of Registration Certificate

The registrar shall issue a Certificate of Registration of the Proposed LLP based on the application received and its approval.

Step 4: Filing of Form LLP-3

The LLP shall now file Form LLP-3 along with the LLP Agreement within 30 days from the date of incorporation. This shall contain the following details: the name of the LLP, the names of designated and other partners, their profit-sharing ratios, and the form of the capital contribution made. The rights and duties of the partners and the rules governing them shall also be provided.

Step 5: Intimation to the Registrar of Firms

The LLP shall now provide the Registrar of Firms with an intimation regarding the conversion of the firm into an LLP within 15 days from the date of incorporation of the LLP in Form-14, which should be attached with the.
The LLP Incorporation Certificate and Documents were submitted along with Form FiLLiP.

Now, it is to be noted that once all these steps pertaining to the conversion of a Partnership Firm to an LLP are complied with, we can say that the conversion is said to be done. But this does not bring into effect the transfer of the licenses and permits which were in the hands of the Partnership Firm and, hence, should now be freshly applied for in the name of the LLP.

In case of any refusal made by the registrar, the applicants can appeal before the Tribunal concerning the same.