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LLP to Company

Corporatization is the need of great importance. The whole world is bit by bit floating towards one worldwide market with no trade obstructions between the nations. With the development of corporate work culture and special startup benefits, an extraordinary piece of business people are anticipating corporatization. This step can be started in 2 different ways as specified beneath:

  1. Incorporation of a new corporate Entity.
  2. Change of existing substance (for example LLP/Partnership Firm) into a Company.

The second alternative of the transformation of Limited Liability Partnership into a corporate might be practical for the existing entities to switch over from one mode of business to another. The process of conversion is a step by step procedure, which is a technical process but if handled with expert knowledge may be time and cost-saving, as well.

There were no provisions under the Companies act, 2013 with respect to the Conversion of Limited Liability Partnership into Company. Service of Corporate Affairs has passed a notice on 31st May 2016 in such warning its permitted conversation of LLP into Company. These rules called “the Companies Authorized to enlist Amendment Rules, 2016.

Advantages of Conversion of LLP into Company:

No Capital Gain:

The Gujarat High Court (HC) had held in the taxpayer’s case that conversion of a firm into a company was not a transfer (even before section 47(xiii) was introduced) and would not be subject to capital gains tax.

List of Documents required filing with ROC for the conversion of LLP into Company:

The company required filing e-form URC- 1 along with all the below mentioned documents:

  1. A list showing the names, addresses, and occupations of all persons named therein as members with details of shares held by them.
  2. a list showing the particulars of persons proposed as the first directors of the company

iii. an affidavit from each of the persons proposed as the first directors, that he is not disqualified to be a director under sub-section (1) of section 164 and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief

  1. a list containing the names and addresses of the partners of the Limited Liability Partnership
  2. Copy of LLP Agreement
  3. a statement of assets and liabilities of the Limited Liability Partnership duly certified by a chartered accountant in practice which is made as on a date not earlier than thirty days of the filing of form no.URC-1

vii. a copy of the latest income tax return of the Limited Liability Partnership

viii. an undertaking that the proposed directors shall comply with the requirements of Indian Stamp Act, 1899 (2 of “1899)

  1. written consent or No Objection Certificate from all the secured creditors of the applicant
  2. written consent from the majority of Partners
  3. a statement specifying the following particulars:—

♦ the nominal share capital of the company and the number of shares into which it is divided;

♦ the number of shares taken and the amount paid on each share;

♦ the name of the company, with the addition of the word “Limited” or “Private Limited” as the case, may require, as the last word or words thereof;

 

The company required to file e-form INC-32/ INC-33/ INC-34 along with URC-1 as linked form with all the attachment as required in normal Incorporation of Company like:

xii. MOA & AOA

(Physical in case of more than 7 subscribers otherwise INC-33 and INC-34)

xiii. INC-9

xiv. DIR-2 etc.