Process to Convert Private Limited to Limited Liability Partnership
Conversion of Private Limited Company to LLP
A private limited company (PVT LTD) is a type of business entity that is registered with the Registrar of Companies (RoC). A PVT LTD has a limited liability, which means that the shareholders are only liable for the company's debts up to the amount of their investment. A PVT LTD can be converted into a limited liability partnership (LLP) by following the procedure laid down in the Companies Act, 2013
Benefits of converting a PVT LTD to an LLP
There are several benefits to converting a PVT LTD to an LLP. These include:
Simplified registration process: The registration process for an LLP is much simpler than the registration process for a PVT LTD.
Less compliance requirements: LLPs have fewer compliance requirements than PVT LTDs.
Flexibility in management: LLPs offer more flexibility in management than PVT LTDs.
Tax benefits: LLPs enjoy certain tax benefits that are not available to PVT LTDs.
Procedure for converting a PVT LTD to an LLP
The following are the steps involved in converting a PVT LTD to an LLP:
Pass a resolution in the board meeting: The first step is to pass a resolution in the board meeting of the PVT LTD to convert the company into an LLP. The resolution should be passed by a majority of the directors of the company.
File the conversion application: Once the resolution has been passed, the company needs to file an application for conversion with the RoC. The application should be filed in Form 3 of the Companies Act, 2013.
Submit the required documents: Along with the application, the company needs to submit the following documents to the RoC:
Consent of all the shareholders of the company
Limited liability partnership agreement
Statement of assets and liabilities of the company
No-objection certificate from the tax authorities
Certificate of registration
Once the RoC has approved the application, it will issue a certificate of registration to the company. The certificate of registration will be issued in Form 19 of the Companies Act, 2013.
Intimation to creditors and other stakeholders
The company is required to intimate its creditors and other stakeholders about the conversion within 30 days of the date of conversion. The intimation can be given in writing or by email.
Conclusion
The conversion of a PVT LTD to an LLP is a simple process that can be completed in a few weeks. The benefits of converting to an LLP are numerous, and the process is relatively straightforward. If you are considering converting your PVT LTD to an LLP, I recommend that you consult with a legal advisor to ensure that the process is completed correctly.
Additional Information
Cost of conversion
The cost of converting a PVT LTD to an LLP will vary depending on the size of the company and the complexity of the conversion process. However, the cost is typically in the range of Rs. 10,000 to Rs. 20,000.
Timeframe for conversion
The timeframe for converting a PVT LTD to an LLP is typically 4-6 weeks. However, the timeframe may be longer if the conversion process is complex or if there are any delays in obtaining approvals from creditors or other stakeholders.
Tax implications of conversion
The tax implications of converting a PVT LTD to an LLP will depend on the specific circumstances of the company. However, in general, the conversion will not result in any immediate tax liability. However, the company may be required to file additional tax returns in the future.
Conclusion
The conversion of a PVT LTD to an LLP is a relatively straightforward process that can offer a number of benefits to the company. However, it is important to consult with a legal advisor to ensure that the process is completed correctly and that the company is aware of any potential tax implications.
Created & Posted By Abhishek Kumar
Accounts executive at TAXAJ
TAXAJ is a consortium of CA, CS, Advocates & Professionals from specific fields to provide you a One Stop Solution for all your Business, Financial, Taxation & Legal Matters under One Roof. Some of them are: Launch Your Start-Up Company/Business, Trademark & Brand Registration, Digital Marketing, E-Stamp Paper Online, Closure of Business, Legal Services, Payroll Services, etc. For any further queries related to this or anything else visit TAXAJ
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