What is Partnership Firm to LLP Overview
After introduction of LLP Act in 2008, many Partnership Firms have started to convert their Partnership Firm to LLP. The reasons of conversion are self-evident such as ability to take unlimited number of partners, separate legal entity, limited liability and ease of ownership transfer. Because of these advantages of LLP over Partnership, LLP has become very popular amongst small and medium sized businesses.
Process for Partnership Firm to LLP
Complete our LLP Form
Obtain DSC and DPIN
Approval of Name and submission of Forms
Certificate of Registration/ Incorporation
Documents Required For Partnership Firm to LLP
Benefits Of Partnership Firm to LLP
FAQs On Partnership Firm to LLP
The partnership is required to consist of the same partners that were present in the original Partnership and in the same proportion in which their capital accounts stood in the books of the Firm on the date of conversion. Therefore, the LLP cannot have more or less partners than the extant Partnership Firm, and any changes in the number of partners can be made only after conversion into the LLP.
LLP name is reserved through an online form. In accordance with the prescribed regulations, the partners can provide a maximum of 6 names in preferential order to reserve any one. The Registrar may ask to re-submit the application with a different name if given names do not fall under criteria of uniqueness, relevancy or do not fulfill the other requirements.
No. There is no minimum amount prescribed to form an LLP. It can start off with any amount of capital demanded by the business. Although there is no minimum requirement, every partner must make a contribution to LLP. The amount of capital contribution is disclosed in the LLP Agreement and amount of stamp duty to be paid is decided by total contribution amount.
Director Identification Number is a unique number assigned by the Ministry of Corporate Affairs to Individuals on application made which allows any individual to be a Director in any Company or Designated Partner in LLP. Further, the concept of DPIN (Designated Partner Identification Number) does not persist anymore with respect to incorporation of LLP.
There are no limitations in terms of citizenship or residency to be a Partner. Therefore, the LLP Act, 2008 allows Foreign Nationals, including Foreign Companies & LLPs to incorporate LLP in India; provided at least one Designated Partner is a resident of India. However, the person should be of age 18 years or above i.e. not a minor and competent to enter into a contract. Also, the proposed Designated Partner shall have DIN.
LLP Agreement is an agreement executed by all the designated partners and partners after LLP incorporation. The agreement prescribes all the clauses related to business; including the rights, role, duties and responsibilities of partners. The agreement must be filed within 30 days of the issue of a certificate of incorporation. Failure to which will charge an additional fee of ₹ 100 per day till the date of filing.
To effect any changes in the Limited Liability Partnership, the Partners shall pass the resolution at the meeting of Partners as required by the LLP Agreement of concerned Limited Liability Partnership. Further, the resolution shall authorize any of the existing Designated Partner to act on behalf of the LLP and its Partners. Also, the authorized partners shall also hold a valid DSC to file the application to Registrar. As soon as the partners execute the Supplement Agreement for a change of partner or their respective designation, an application shall be filed with MCA to approve the changes of a partner or the designation.
LLP and general partnership are treated equivalently (except for recovery purpose) in the Act; the conversion from a general partnership firm to LLP will have no tax implication. This is true if the rights and obligation of the partners remain the same after conversion and if there is no transfer of any asset or liability after the conversion. If there is a violation of these conditions, the provision of capital gain will apply.
Generally, the basic purpose of conversion is for keeping the same name to maintain the brand identity in the market. To convert the LLP under the original name it is essential to attach any valid proof that corroborates the claim of use of the brand name by the firm.in such cases, MCA grants the approval on the basis of documents attached in the concerned form for name reservation.
No. The new LLP must seek transfer of the assets such as licenses, permits, registrations, properties, etc.
The main advantage is that in an LLP, there are fewer formalities after the business has been incorporated. For example, you need not file annual returns etc. unless your income crosses a certain limit. An LLP is preferable if you are offering professional services, like a lawyer or architect. A Pvt. Ltd. Company is preferred if you want to launch a scalable enterprise.
Yes, after acquiring DIN/DPIN an NRI or Foreign national can become a designated partner is LLP. However, at least one designated partner in the LLP must be a Resident of India.