In India, there are many ways in which you can convert any partnership firm into a full-scale LLP. Certain processes must be followed, and major documentation must be submitted to procure the correct document for the formation of the LLP. You need to clearly mention the number of partners, the legal entities, and the exact targets of the LLP before you finalise the papers.
If you want to know how to convert a partnership firm into an LLP, first and foremost, you need to know the type of partnership you have. In India, there are multiple provisions through which any type of partnership can become an LLP. Much paperwork needs to be done; all the directors’ names, designations, addresses and affiliations need to be given.
Several reasons for which any partnership can be converted into an LLP. If it wants to be a separate legal entity, if there are too many directors and members, if there are few important liabilities that can only be fulfilled by forming an LLP, then it is better to go for an LLP.
Steps To Be Followed for The Formation Of An LLP:
If you are interested in converting a partnership firm into LLP, then you can go through the following points in detail:
- There are specific basic requirements like a minimum of two partners, there should be DPIN, and one of the designated partners must be an Indian citizen. To add, there is a need for consent from all unsecured creditors. And each of the members should contribute to the formation of the LLP.
- Gone are those days when you had to be present physically to ratify the working of LLP. There are reliable online methods that can prove to be beneficial for you. In the first step, the digital signature certificate should be presented and it should be uploaded. After this, you need to get a DPIN or a Designated Partner Identification Number. You should have at least two important partners if you want to convert the partnership to an LLP.
- The third step includes naming the LLP or choosing the name for the LLP. This name, after selection, has to be presented to the Ministry of Corporate Affairs for official approval of the name. It should be a unique name, and there should be a reference mention of the phrase limited liability partnership.
- By the time you go for the fourth step, you get the name approval, and then you have to fill in all the details in form 17, check and fill up the incorporation application and then fill up all the details in the subscriber’s sheet.
- Additionally, when you want to convert a partnership into an LLP, you need to submit major documents like the latest and updated income tax papers, all returns, and a checking account of liabilities and assets as ratified by experienced chartered accountants of the country. You should also procure a statement of consent from all the partners of the partnership firm, then provide the list of creditors who are part of the firm. After this, you should also look at a proper ‘No Objection Certificate’ from major tax authorities.
- When you convert a partnership firm into an LLP, the next few steps should include the perfect approval of all the major partners, all the paperwork of the subscribers, the detailed registration address etc.
- When you complete all the documents successfully and submit the required fee, the registration process takes another 15-20 days. You can also get the certificate of conversion once the registrar finishes all the formalities of verifying the major documents.
- There are major differences between a partnership firm and an LLP. This can extend to liability, number of members, accounts, digital signature, reference to the membership of the partnership firm etc. All these differences should be taken care of before you start submitting the documents for the conversion process.
Certain mandatory things need to be done when the conversion takes place. Section 55 of the Limited Liability Partnership Act, which came into force in 2008, is an important Act in this direction. All the partners who are at present, the partnership firm members, can be added to the LLP, with each of their signature uploads. While the application is still in process or submitted, there cannot be a sudden withdrawal of the partners, nor can there be any sudden inclusion of the partners. The valid digital signature should be there, and the partnership firm which needs to get converted must be registered under the Partnership Act of 1932. All the partners should consent to the entire conversion from the partnership firm to the LLP. If any kind of removal of a partner is needed, then it can only be done after the conversion is completed. To add, there is also another point that is to be noted. The Director Identification Number or DIN or the Designated Partner Identification Number or DPIN must be included for a successful conversion process. All the rules applicable for an LLP apply to all the partners who are part of the firm.
Any LLP formation requires a huge list of papers and several rules to be implemented before the company actually starts functioning. All the directors and the body’s members should have proper roles and responsibilities to contribute to the scaling of the LLP in the long run. Limited partnerships, liabilities etc. should be considered before you go for any LLP formation.
Now, you can start searching for the best-established LLPs with a target reach, stakeholders, and customers that have been formed due to a converted partnership. Vakilsearch is one such reliable portal from where you can get the best ideas about how to convert a partnership into an LLP. It is a one-stop destination where you get sound advice, online support and guidance about the company, taxation, company registration and formation and legal aspects of any company. If you are an entrepreneur, you can select some of the most lucrative businesses, but you must have the proper papers to convert your business into an LLP. Check out Vakilsearch and get the right solution to all your queries.
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