corporate law

Converting a Partnership Firm to Limited Liability Partnership (LLP): Step-by-Step Guide

Conversion of Partnership Firm to Limited Liability Partnership (LLP)

In order to convert a Partnership Firm into a Limited Liability Partnership (LLP), it is essential that all partners become Designated Partners. Without this requirement being fulfilled, conversion cannot take place.

Obtaining Designated Partner Identification Number (DPIN)

  • Partners of the firm do not possess a Designated Partner Identification Number (DPIN). Therefore, it is necessary to obtain a DPIN for each of the designated partners.

  • The application for allotment of a DPIN must be submitted online.

Name Reservation Process

  • Once two DPINs or DINs are obtained, an application for name reservation can be submitted to the Ministry of Corporate Affairs (MCA). Name reservation must be secured prior to filing forms for the conversion.

  • The registrar will approve the applied name, provided it is not deemed undesirable by the Central Government or is not identical or too similar to any existing partnership firm, LLP, corporate body, or registered/trademark pending registration under the Trade Marks Act, 1999.

  • The application for name availability must be made in E-Form 1 to the Registrar.

Application for Conversion

The application for conversion must be made using E-Form 17 and include the following attachments:

  1. A statement regarding the partners of the firm (can be provided in tabular format).
  2. Incorporation Document & Statement in Form 2 filed electronically (linked form).
  3. Statement of Assets and Liabilities of the firm, certified as true and correct by a practicing Chartered Accountant.
  4. A list of all creditors along with their consent to the conversion (may be provided in a tabular statement).
  5. Approval of the governing council (for professional firms).
  6. The latest Income Tax Return.
  7. Approval from any other necessary authority.
  8. Details of any pending proceedings in courts or tribunals.
  9. Any rejection letter from the Registrar regarding previous conversion applications.
  10. Information on any convictions, rulings, or judgments related to the firm that are currently active.
  11. Optional additional attachments, as may be required.

Registrar's Review and Registration

  • If the registrar finds the application satisfactory and compliant with regulations and procedures, he will register the conversion.

  • A Certificate of Incorporation (COI) confirming the conversion of the partnership firm into an LLP will be issued in Form 19 as per the LLP Rules & Forms 2008.

Post-Registration Procedures

  • Following receipt of the Certificate of Registration, Form 3 must be filed, which includes the LLP Agreement.

  • The newly formed LLP must notify the relevant Registrar of Firms, with whom the former partnership was registered under the Indian Partnership Act, 1932, about the conversion within 15 days of registration. This notification is to be made utilizing Form 14 of the LLP Rules & Forms 2008.

Attachments for Form 14

Form 14 must be accompanied by:

  1. A copy of the Certificate of Incorporation of the newly formed LLP.
  2. A copy of the incorporation document submitted in Form 2 (to the Registrar of Firms).
  3. Other optional attachments, as required.

Communication Requirements

The limited liability partnership is required to ensure that, for a period of twelve months beginning no later than fourteen days after the date of registration, all official correspondence includes:

  1. A statement indicating that it converted from a firm to an LLP as of the registration date.
  2. The name and registration number (if applicable) of the firm from which it was converted.

By following these procedures, partners can effectively convert their partnership firm into a Limited Liability Partnership, thus ensuring compliance with the respective legal requirements.