A Limited Liability Partnership (LLP), is an economical form of the incorporated structure of the business with benefits of both corporate and partnership structures. However, LLP has its own set of limitation, such as non-separation of ownership and management, limitations under FDI regulations, etc. Therefore, venture capitalists and private equity investors are more keen on corporate structures which allow them to delineate from day-to-day/ operational management. Therefore, in case LLPs need capital infusion through venture capitalist or private equity investors, they tend to convert into a private Limited Company. Certain relevant queries in connection with the same have been dealt below.
- The base rate of income tax in case of an LLP is 30%, whereas for private limited companies, the base rate of tax is 22%
- A private limited company has a separate legal identity as compared to a LLP.
- There is a separation of ownership and management in a private limited company, whereas in Limited Liability Partnership (LLP), the partners are owners and the managers of the LLP.
- The venture capitalist prefer corporate structures over LLP structures.
- Due to stringent compliances and disclosures under various laws, Companies enjoy a high degree of creditworthiness as compared to LLPs
2. What are some key/ basic documents required for conversion of a Limited Liability Partnership (LLP) into a company?
- Particulars of members along with the proposed shareholding ratio
- Declaration of two or more directors verifying the particulars of all members
- Affidavit from all the partners for dissolution of the firm
- Copy of the LLP Agreement
- Copy of Newspaper advertisement in prescribed format
- Relevant certification from a CA/CS/CWA; etc.
- Consent of majority of members
- No objection certificate from the concerned Registrar of companies
- Certificate of registration of LLP
- Statement of accounts of the existing entity, prepared not later than 15 days preceding the date of application duly certified by auditor
- Undertaking by the proposed directors for compliance with requirements of Indian Stamp Act, 1899
- A copy of latest Income Tax Return of the firm
- Declaration/particulars as per DIR 8, DIR 2, 16(1), INC 9
- Bank Statement with current transactions
- KYC documents
- Electricity Bill, Rent Agreement, NOC by the owner of Registered office
- Dissolution Deed
- NOC unsecured creditors & secured creditors
- Preparation of DSC and DIN of all proposed Directors
- Preparation and Filing of name application through web form RUN through MCA portal.
- Preparation and filing of E form URC 1, E form spice, E form Spice MOA & E form Spice AOA
- Appropriate Government fees is payable depending upon the authorized capital of the company.
- Issuance of Certificate of incorporation along with PAN and TAN.
5. How Legal Terminus can help you to convert a Limited Liability Partnership (LLP) into a private limited company?
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The fee mentioned above does not include any govt fees, expenditure towards any newspaper advertisement, certification from any professional, preparation of Statement of accounts and accordingly kindly contact our executive to get an all inclusive fee quote