Overview Of Conversion Of LLP To Private Company
There are Entrepreneurs in India who start their business journey with a Limited Liability Partnership (LLP), then after experiencing good growth in business, they would be keen to convert their LLP firm into a private limited company for more development and prosperity in their business. As per the provision mentioned in Section 366 of the Companies Act, 2013 and Company (Authorized to Register) Rules, 2014, an LLP can be converted into a Private Limited Company by following the specified procedure.
Choice Of LLP Vs Private Limited Company
LLP is majorly suitable for small businesses that have annual sales turnover of fewer than Rs 40 lakhs and a capital contribution of fewer than Rs 25 lakhs. LLPs that satisfy these conditions do not have to go through the audit every year, on the other hand, it is necessary for a private limited company to conduct an audit of its financial statement each year. Though, in case, LLP has an annual turnover of Rs 40 lakhs or a capital contribution of more than 25 lakhs, the need for compliance become almost similar for both the private limited company and LLP, forcing the owners of LLP to convert into a Private Limited Company.
Corporatization has become the need of the current market situation. We live in a world where the ulterior goal of every market is to drift towards one global market removing the barriers between the countries. There are many start-ups and entrepreneurs who are eager to step into corporatization.
Checklist To Convert An LLP To Private Company
Before you step into the conversion process, there are various requirements which you have to fulfil to convert an LLP into a Private Limited Company, for example, it is mandatory for an LLP to have seven members or partners and it is necessary to get the approval from all partners. An advertisement also has to be published in both local and national newspapers about the conversion, and you have to get No Objection Certificate (NOC) from the respective ROC in which location LLP is registered. After completing all these processes, the incorporation procedure will get started.
Documents Needed For The Conversion Of LLP Into A Private Limited Company
- Address Proof of the owner
- Identity Proof of the owner
- Passport size photograph of the owner
- Documents needed at the time of filing of Form URC-1
- Details of Name, Address and Shares owned by the members along with the list of the members.
- Provide all the details such as Name, Address, passport number, DIN, with an expiry date of all the directors of the Company.
- In addition, file all mandatory documents to submit with the Registrar of Companies for the registration process
- Copy of Limited Liability Partnership agreement along with a list which holds the details of the partners of LLP and duly verified certified copy of the registration is also required.
- No-objection certificate or NOC from all the investors or creditors is required.
- Accounts statement of the company which is duly certified by the auditor, and it must not less than six days from the application applied date and the newspaper advertisement copy is required.
- The statement with the information of the nominal share capital of the LLP and the number of shares classified the number of shares shared among partners and the amount allotted for each share and the firm name with the word private limited at the end has to be provided.
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