LLP to Private Limited Company Conversion

Why convert an LLP to a company?

An LLP is simple to run, but investors generally cannot buy into it, and it cannot issue ESOPs. Converting to a private limited company under the Companies Act lets you raise equity, give employees stock options and present a structure institutional investors expect.

How conversion works

• All partners must consent, and the partners become the company’s first members and directors.
• Creditors are informed and their consent obtained where needed; a notice is published.
• The application for registration of the LLP as a company is filed with the MCA, along with the MOA and AOA.
• On registration, the LLP’s assets, liabilities, contracts and proceedings transfer to the company, and the LLP stands dissolved.

Checklist before you convert

• LLP filings up to date – Form 8 and Form 11 for every year, and the income tax returns.
• Consent of all partners, and an agreed shareholding for the new company.
• List of creditors and their consent where required; a public notice of the proposed conversion.
• Statement of assets and liabilities certified by a chartered accountant.
• Name – the LLP's name with "Private Limited" in place of "LLP", or a new name.
• Registered office proof and the details, DSCs and DINs of the proposed directors.

Tax and stamp duty

Converting an LLP into a company transfers its assets, including any property, to the new company. Depending on the facts, this can have income tax and stamp duty consequences – for example, stamp duty on immovable property in some states. Get advice before converting; we work with your chartered accountant so the conversion is planned with these points in mind.

After conversion

• Open the company's bank account or update the existing one, and transfer balances as advised by the bank.
• Update GST, licences, contracts and vendor records with the new company's name and details.
• Hold the first board meeting, appoint the auditor and issue share certificates to the shareholders.
• Put in place a shareholders' agreement and, if you plan to reward employees with equity, an ESOP policy.
• From now on, follow the company's annual ROC compliance, which is stricter than an LLP's.

Our service

We review the LLP’s filings, prepare the consents, statements and new MOA and AOA, file the conversion with the MCA and give you a checklist for updating PAN, GST, bank accounts and licences. After conversion, see our ESOP policy and shareholders’ agreement services.