17 February 2012
Dear Sir/ Madam, Please tell me that what is the process to convert Private Limited Company into LLP in Details and which Forms Should I Filed first and last?
17 February 2012
LLP, a legal form available world-wide is now introduced in India and is governed by the Limited Liability Partnership Act 2008, with effect from April 1, 2009. link (pdf) .
LLP combines the advantages of ease of running a Partnership and separate legal entity status and limited liability aspect of a Company.
Here are some of the main features of a LLP
* LLP is a separate legal entity separate from its partners, can own assets in its name, sue and be sued. * Unlike corporate shareholders, the partners have the right to manage the business directly * One partner is not responsible or liable for another partner’s misconduct or negligence. * Minimum of 2 partners and no maximum. * Should be ‘for profit’ business. * Perpetual succession. * The rights and duties of partners in LLP, will be governed by the agreement between partners and the partners have the flexibility to devise the agreement as per their choice. The duties and obligations of Designated Partners shall be as provided in the law. * Liability of the partners is limited to the extent of his contribution in the LLP. No exposure of personal assets of the partner, except in cases of fraud. * LLP shall maintain annual accounts. However, audit of the accounts is required only if the contribution exceeds Rs. 25 lakhs or annual turnover exceeds Rs.40 lakhs.
A LLP is indeed advantageous because of comparatively lower cost of formation, lesser compliance requirements, easy to manage and run and also easy to wind-up and dissolve, no requirement of minimum capital contributions, partners are not liable for the acts of the other partners and importantly no minimum alternate tax (as of date). But, LLP cannot raise money from the public.
The process for incorporating a LLP is pretty simple. The flow chart here depicts it clearly.
The Registrar of Companies (ROC) is the authority having jurisdiction over the incorporation. The steps required are:
* Decide on the Partners and the Designated Partners * Obtain Designated Partner Identification Number (DPIN) and a digital signature certificate. * Decide on the name of the LLP and check whether it is available. * Draft the LLP agreement * File the LLP Agreement, incorporation documents and obtain the Certificate of Incorporation.
PLEASE ALSO NOTED THAT:
LLPs shall be registered with the Registrar of Companies (ROC) (appointed under the Companies Act, 1956) after following the provisions specified in the LLP Act. Every LLP shall have a registered office. An Incorporation Document subscribed by at least two partners shall have to be filed with the Registrar in a prescribed form. Contents of LLP Agreement, as may be prescribed, shall also be required to be filed with Registrar, online.
Contents of LLP Agreement or any changes made therein, if any, may be filed in Form 3 and details of partners/designated partners may be filed in Form 4 in accordance with LLP Rules, 2009.
17 February 2012
Application for conversion in eForm 18 to be submitted by the Shareholder of the Company covering name, registration number and date of Incorporation of the Company, consent of all shareholders of the Company along with following details:
•Whether any security interest in the assets of the company is subsisting or in force •Whether up to date Income-tax return is filed under the Income-tax Act, 1961. •Whether any prosecution initiated against or show cause notice received by the company for alleged offences under the Companies Act, 1956. •Whether any proceeding by or against the company is pending in any Court or Tribunal or any other Authority. •Whether any conviction, ruling, order, judgment of any Court, Tribunal or other authority in favour of or against the company is subsisting. •Whether any clearance, approval or permission for conversion of the company into limited liability partnership is required from any body/ authority. etc
All the eforms will be digitally signed by any Designated partner and shall be certified by an advocate/company secretary/chartered accountant/cost accountant in practice engaged in the formation of LLP.
CAclubindia
