This article talks about process of conversion and required documents during conversion of partnership firm into an LLP. LLP is a limited liability partnership firm which is incorporated under the Ministry of Corporate Affairs. All filings of an LLP is done under MCA. LLP has incorporated by minimum, and it is a separate legal entity. If you want to convert your partnership firm into an LLP, then you have to go through a procedure under MCA.
Procedure of Conversion
Digital Signature Certificate (DSC) –
First you have to take a digital signature certificate for which you have to apply online on the website of Ministry of Corporate Affairs. Digital Signature is not required in the Partnership firm registration, so you have to create all partners digital signature certificate during conversion.
Designate Partner Identification Number (DPIN) –
then you have to create designated partner identification number. Once a partner obtains this, he will use this lifetime because it does not require renewal. It is a mandatory number for incorporation of an LLP. It is a compulsory requirement during conversion.
Name Approval –
You cannot use the name of your Partnership firm for your LLP without permission from MCA. In a partnership firm, there is no need no registration of name, but in LLP you cannot use other firm’s name. So you have check name availability for your LLP. For this, you have to visit the official website of Ministry of Corporate Affairs. You can check this on this link http://www.mca.gov.in/mcafoportal/showCheckLLPName.do
Form No.17 –
Filing of Form 17 is must for those who want to convert their partnership firm into an LLP. Form 17 is an Application and statement for conversion of a firm into Limited Liability Partnership. You have to file this form to the MCA, without the filing of form 17 conversion will not be valid. You have to submit this form along with your incorporation application. The following documents must be attached with form 17.
- A statement of Consent by all partners of the firm that they want conversion
- An explanation of assets and liabilities of the partnership firm which has to be certified by a chartered accountant in practice
- You have to submit your copy of the acknowledgment of latest Income tax return
- You have to get approval from any authority which is mandatory to run a business
- You have to submit the list of all the secured creditor with their consent of conversion
- Also, NOC is required from tax authorities.
After the attachment, this form has to digitally sign by a Designated Partner and a Chartered Accountant or Company Secretary. You can file this online on the website of Ministry of Corporate Affairs.
Form no. 2 and 3- you have to submit form 2 and form 3 with type 17. Form 2 is required for incorporation of an LLP and 3 is for changes made by an LLP. So you have to submit your incorporation form with form 17. Form no.2 has required some documents like
- Address Proof of Registered office of LLP, for this you have to submit your electricity bill, and in case of rented office, you have to produce no objection certificate from a landlord.
- Subscriber’s sheet including their consent in it
- Details of LLP and Partners
- If there is a requirement of approval from principal regulatory authority, then you have to submit approval.
LLP form no 3 contain details of the initial agreement of LLP. You can file this during conversion of a Partnership firm into LLP. LLP agreement is required to attach with form no. 3. You can file these form online by visiting the official website of Ministry of Corporate Affairs.
Why choose LLP over Partnership
In a partnership firm there is no limited liability on partners, but in LLP, Liability of Partner is limited there are not liable for other partner’s actions. And also LLP is a separate legal entity which can sue or can be sued by others. LLP registration cost is even less, and the Limited Liability Partnership Act provides secure business to an LLP.
In a partnership firm, there is a limit on some partners that is 20, but in LLP there is no limit on partners. And you have to convert into an LLP when a limit is exceeded in a partnership firm.
Conclusion for How to Convert Partnership Firm into LLP
If you are thinking of conversion, then you should convert your partnership firm into an LLP because LLP laws provide security to an LLP. And an LLP has more benefit than a Partnership firm. As you can see that process of conversion is natural, you have to get your DSC and DPIN from the MCA then you can file your form 17 for conversion. As the above-mentioned process is simple and you can check above for required documents. So if you are planning of conversion then you should do it for more benefits for your business.