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LLP, which is the recognized form of business organization was introduced in India by the way of the Limited Liability Partnership<\/strong><\/a> Act, 2008, and the \u00a0LLP Rules, 2009. A limited liability partnership<\/a><\/strong> (LLP) is a kind of partnership in which all the partners have limited liabilities. It is an alternative corporate form of business organization which gives the benefits of limited liability of a company and the flexibility of a partnership. Its existence continues irrespective of the changes in the partners and owners. It is also capable of entering into the contracts and holding of property in its own name.<\/p>\n It is a separate legal entity, and it is liable to the full extent of its assets but the liability of the partners is limited to their agreed contribution in the LLP. In an LLP, one partner is not responsible or is not liable for another partner\u2019s misconduct or negligence. In an LLP, all the mutual rights and the duties of the partners within the LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. However in the absence of such agreement, the LLP would be governed by the framework which is provided in Schedule I of the \u00a0Limited Liability Partnership<\/strong><\/a> Act, 2008, which describes the matters relating to the mutual rights and the duties of the partners of the LLP.<\/p>\n Further any other form of business such as a partnership which is set up under the provisions of the Indian Partnership Act, 1932, a private limited company and an unlisted public limited company can convert itself into LLP by the provisions of the \u00a0LLP Act, 2008 and by following the due procedure of law. Following is the Conversion of LLP into a Partnership firm :<\/p>\n After the conversion of LLP into Partnership, Section 366 of the Companies Act, 2013 has provided the existing LLPs an option to convert themselves into a Company, which is a welcome move by the Ministry of Corporate Affairs. However certain provisions such as the requirement of having a minimum of seven or more members are restricting the \u00a0LLPs with fewer partners from its conversion. And any LLP having less number of partners who are willing to convert itself into the \u00a0Company must increase its number of partners, which is something the small entrepreneurs are not comfortable with. Hence the requirement of a minimum of 7 members is a major hurdle in conversion into the Company form of business. The Government must come up with an amendment in rules to allow the LLPs with 2 partners for the Conversion of LLP into Partnership.<\/p>\n Related:<\/strong><\/span>\u00a0Conversion of Partnership into LLP<\/strong><\/a><\/p>\n The introduction of the Companies Act, 2013 \u00a0allowed the conversion of LLP into Private Limited Company which was not allowed earlier as both the LLP, 2008, and the Companies Act, 1956. The\u00a0 Section 366 of the Companies Act, 2013 provided that any partnership firm, a limited liability partnership<\/a><\/strong>, a \u00a0cooperative society, society, or any other business entity which is formed under any other law consisting of seven or more members, may at any time register under the Companies Act, 2013 as an unlimited company, or as a company which is limited by shares, or a company limited which is guaranteed by following the procedure that is laid down in the Companies (Authorised to Register) Rules, 2014.<\/p>\n There must be A general meeting, where the majority of the partners have given their consent for such kind of conversion.<\/p>\n All the seven proposed directors of the company must hold a Director Identification Number (DIN) and the Digital Signature Certificate.<\/strong><\/a> In case any of them do not possess both of these numbers then they must apply for the same.<\/p>\n To obtain DIN an application in Form DIR \u2013 3 should be filed on the MCA Portal. The \u00a0DIN application is then processed and is approved by the Central Government through the office of the Regional Director, Ministry of Corporate Affairs. Form No. DIR \u2013 3 must be accompanied by a self-attested Proof of Identity and Proof of Address and one recent passport size color photograph of the Applicant. All the documents must be attested by a practicing professional viz. Practicing Cost & a Management Accountant, practicing Company Secretary, or a \u00a0practicing Chartered Accountant.<\/p>\n Name approval has to be obtained from the Registrar of the \u00a0Companies (RoC) by applying an e-Form INC-1. For this, the person needs to decide on an itinerary, as mentioned in Form INC-1. Once the name is approved by the authority, it is valid for 60 days. The subscriber to the Memorandum of Association (MoA) and Articles of Association (AoA) shall be the applicant for the name application.<\/p>\n After obtaining the name approval from the ROC, the applicant shall prepare and file the Form URC\u20131 along with the following documents:<\/p>\n After obtaining the name approval, and the approval of Form No. URC\u00a0\u2013 \u00a0from the Registrar, the draft of Constitutional Documents of the proposed Company i.e. Memorandum of Association (MOA) and the Articles of Association (AOA)<\/a> is to be drafted and then filed with the RoC along with the forms\/documents which have been stated below.<\/p>\n The Subscription Pages of MOA & AOA\u00a0\u2013 The last page of the MOA and the AOA<\/a><\/strong> must contain details of the subscribers to the Memorandum and the \u00a0Articles and the number of shares to be subscribed by each. This is the last page that is required to be executed by the subscribers.<\/p>\n After all the incorporation papers are filed and are reviewed by the RoC, the RoC may require certain clarifications. These clarifications or the inquiry needs to be satisfied by the person who has been authorized to do so by the Power of Attorney which is filed with the RoC.<\/p>\n Once all the clarifications are provided for the\u00a0Conversion of LLP into Partnership, the Certificate of Incorporation is issued by the RoC and then the company is deemed to be incorporated from the date given in the Certificate of Incorporation.<\/p>\n After obtaining the registration under Section 367 of the Companies Act, 2013, an intimation to this effect shall be given, within fifteen days of such registration to the concerned Registrar (LLP) with whom it was originally registered, along with the necessary documents or the papers for its dissolution as a\u00a0Limited Liability Partnership<\/strong>.<\/p>\n Visit Company Registration Online<\/a> for Company Incorporation.<\/strong><\/p>\nCompanies Act,2013 for LLP<\/h2>\n
Conversion of\u00a0 LLP into Partnership<\/strong><\/h2>\n
Before applying the Conversion of LLP into Partnership, the businessman must ensure the followings:<\/h3>\n
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The procedure that is \u00a0to be followed for the Conversion of LLP into a Private Limited Company<\/strong> is:<\/h3>\n
Step 1: Apply for DIN & Digital Signature Certificate:<\/strong><\/h3>\n
Step 2: Name Approval<\/strong><\/h3>\n
Step 3: Preparation and Filing of Form URC \u2013 1<\/strong><\/h3>\n
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Some more important documents required for the\u00a0Conversion of LLP into Partnership are :<\/h4>\n
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Step 4: Filing of the \u00a0Incorporation Forms<\/h3>\n
The following forms are required to be filed with the RoC:<\/strong><\/h4>\n
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The Clarifications\/Additional Information Required by the RoC:<\/strong><\/h4>\n
Step 5: Issue of Certificate of Incorporation<\/h3>\n
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