Conversion into Limited Liability Partnership

Conversion into Limited Liability Partnership Who can Convert? Procedure Partnership to LLP Company to LLP Important Considerations for Conversion to LLP Tax issues on conversion into LLP Stamp Duty Implications Benefits

Who can convert? Partnership Firm Private Company Unlisted Public Company

No Step Time frame (days) Process 1 DPIN (Designated Partner Identification Number) • Approved DPIN is a pre-requisite for incorporation process 5 • Apply for DPIN and get a provisional DPIN •Certification/Attestation of director's personal details • Sending the same to the MCA Cell and getting it approved 2 Application for Name Availability • Filing of Form 1 3 On conversion of Firm only addition of the word LLP in existing name of the Firm as last word is allowed (Designated Partner Identification Number)

2 No 3 Step Timeframe (days) Process Documents required for incorporation of an LLP • LLP Agreement •Form 2 (Statement by Promoter) •Form 3 (Information regarding the LLP Agreement) • Form 4 & Form 9 (Notice of Consent & Appointment of Designated Partners with their personal details) • Subscription sheet signed by the promoters • Duly stamped LLP Agreement • Proof of Address of Registered Office 2 Drafting the LLP Agreement and after getting it vetted by Promoters, sending it for printing. Important attachments for Form 17 • Statement of partners • Statement of Assets and Liabilities of the company duly certified as true and correct by the C.A. • List of all the unsecured creditors along with their consent to conversion • Approval from any other body/authority, if required • Processing of e-Forms (Designated Partner Identification Number)

5 4 No Step Time frame (days) Process Final Process: Filing all the above documents with the RoC. • Follow up with the RoC Making changes in LLP Agreement. • Other Incorporation documents as suggested by the RoC. 5 Online uploading of e-form Payment of registration fees Issue of certificate of incorporation. (Designated Partner Identification Number)

Partnership LLP (1/2) Existing Partnership Firm can be converted into LLP and all the assets, liabilities and business of existing partnership firm will vest in to LLP. The conversion of partnership into LLP will attract tax liability. All the existing partners must be the partners of LLP. (2) The Explanatory Memorandum explaining the clauses of The Finance Bill (No.2), 2009 has clarified that conversion of firm into LLP will not attract any tax.

Partnership LLP (2/2) Relevant Provisions: Chapter X – Section 55 of LLP Act, 2008. Second Schedule of the LLP Act, 2008. Rule 38 of LLP Rules, 2009.

Company LLP (1/2) Existing Private and Public Limited Company (except Listed Company) can be converted into LLP and all the assets, liabilities and business of existing Company will vest in to LLP. If the security interest subsists on the assets of the eligible company then it cannot be converted into LLP. Company which has taken secured loan of any nature which is outstanding as on the date of conversion cannot be converted into LLP.

Company LLP (2/2) All the existing shareholders must be the partners of LLP as per LLP Act,2008. Company which has repaid loans must ensure that the necessary formality of the Companies Act,1956 is complete and the charge is removed. Relevant Provisions: Chapter X – Section 56 and 57 of LLP Act, 2008. Third and Fourth Schedule of the LLP Act, 2008. Rule 39 and 40 of LLP Rules, 2009.

Important Considerations for Conversion to LLP-(1/3) Filing of Form with Registrar of LLP. Form 7 & Form 1 and Form 17/18 & Form 2 All the numbers of the Company/Partners of the Firm shall be the partner in LLP(and no one else) with the same Capital/Contribution Ratio.

Important Considerations for Conversion to LLP-(2/3) Consent of all members of the Company/Partners of the Firm shall be obtained No security interest on the assets shall be subsisting or in force on the date of application. No Objection Certificate from unsecured creditors. Statement of Assets & Liabilities certified by Auditor of not more than 30 days prior to the date of the conversion application.

Important Considerations for Conversion to LLP-(3/3) All due returns of Registrar of Companies, Income Tax and other Tax authorities shall be filed. No Objection Certificate from other authorities for conversion, if required. After receiving Conversion Certificate the same to be filed within 15 days with Registrar of Companies in Form-14.

Stamp Duty Implications As per Section 58 of LLP Act, 2008, all the assets and liabilities vest into LLP. There is no transfer of assets and liabilities and hence no Stamp Duty is required to be paid.