Conversion of llp into propritership

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18 June 2015 what is the procedure of conversion of llp into proprietership

Arpit Shah

Arpit Shah (Expert)
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18 June 2015 http://www.mycompanyregistration.com/conversion-of-proprietorship-firm-to-llp.html

Querist : Anonymous

Querist : Anonymous (Querist)

18 June 2015 Sir we need info. on conversion from LLP into proprietorship.

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Asha Kanta Sharma

Asha Kanta Sharma

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20 July 2024 Converting a Limited Liability Partnership (LLP) into a proprietorship involves a process where the LLP structure, which typically has multiple partners, is transformed into a business owned and managed by a single individual proprietor. Here’s a step-by-step guide on how to proceed with this conversion:

### Procedure to Convert LLP into Proprietorship:

1. **Approval and Resolution**:
- **Partners’ Approval**: Obtain approval from all partners of the LLP through a partners' meeting or consent process. This approval should be documented in the form of a resolution approving the conversion to proprietorship and authorizing the designated partner(s) to take necessary actions.
- **Resolution**: Pass a resolution for conversion at a partners' meeting. This resolution should outline the decision to convert the LLP into a proprietorship and authorize the designated partner(s) to oversee the conversion process.

2. **Dissolution of LLP**:
- **File Form 24**: File Form 24 with the Registrar of Companies (ROC) to initiate the process of dissolving the LLP. Form 24 is the application for striking off the LLP under Section 63 of the LLP Act, 2008.
- **Clearance Certificate**: Obtain a clearance certificate from the Income Tax Department confirming that all dues have been paid and there are no pending tax liabilities.
- **Creditors’ Consent**: Obtain consent from all creditors of the LLP for the conversion to proprietorship.

3. **Transfer of Assets and Liabilities**:
- Transfer all assets and liabilities of the LLP to the proprietorship. This includes all movable and immovable properties, debts, liabilities, rights, and obligations of the LLP.
- Prepare a list of assets and liabilities to be transferred and ensure proper documentation of the transfer process.

4. **Publication and Public Notice**:
- **Public Notice**: Publish a public notice in at least two newspapers (one in English and one in the regional language) circulating in the area where the LLP’s registered office is located, announcing the conversion of the LLP into a proprietorship.
- **Notice to ROC**: Notify the ROC about the publication of the public notice.

5. **Filing with ROC**:
- **Form 18**: File Form 18 with the ROC along with the required documents, including the resolution for conversion, consent letters from partners and creditors, clearance certificate from the Income Tax Department, list of assets and liabilities transferred, and proof of publication of public notice.
- **Filing Fees**: Pay the prescribed filing fees for Form 18.

6. **Issuance of Certificate**:
- Once the ROC is satisfied with the documents and compliance, they will issue a Certificate of Registration of the proprietorship firm.

7. **Tax Considerations**:
- Consult with a tax advisor to understand the tax implications of the conversion on both the LLP and the newly formed proprietorship, including income tax filings, GST (if applicable), and other regulatory compliances.

### Conclusion:

Converting an LLP into a proprietorship involves meticulous planning, compliance with legal requirements, and proper documentation. It is advisable to seek assistance from a company secretary, legal advisor, or chartered accountant experienced in LLP conversions to ensure smooth transition and compliance with all regulatory requirements under the LLP Act, 2008 and other applicable laws.