PROCESS OF CONVERSION OF PRIVATE COMPANIES INTO LLP
1. Convene Board Meeting & pass board resolution for conversion.
2. Reserve the name vide RUN – LLP (Optional Not Mandatory)
3. File Form FiLLiP and Form 18, If name is already reserved by RUN – LLP.
4. FiLLiP and Form 18 shall be filed within 3 months from the date of intimation by the Registrar
5. After approval of Form FiLLiP & Form 18, file Form-3 for LLP Agreement duly stamped within 30 days of approval.
DOCUMENTS REQUIRED
1. Proof of Office address along with NOC, (if applicable)
2. Utility bill (Mandatory)
3. Subscribers Sheet (Mandatory)
4. Statement from shareholders (Mandatory)
5. Board Resolution for conversion of company into LLP (Mandatory)
6. Detailed financial statements of the company duly certified as true and correct by the auditor. (Mandatory).
7. Auditors Certificate (Mandatory).
8. Copy of acknowledgement of latest income tax return (Mandatory).
9. List of all the secured creditors along with their consent to the conversion (if any).
10. Proof of identity and address of Applicant.
11. In case partner/ designated partner is body corporate: Board resolution for authorization
12. In principal approval of regulatory authority (if required)
13. Valuation certificate (If contribution is in form of other than cash)
PRACTICAL ISSUES FACED DURING THIS PROCESS
1. FiLLiP form is accepting details for PAN & TAN on the basis of Company cases instead of Non-company case.
2. In form-18, ROC expects for detailed financial statements along with notes & schedules instead of just Statement of assets and liability as mentioned in form.
3. No format is provided for Auditors certificate which is needed to be attached in form-18.
LLP VS COMPANY
| SR.NO | BASIS | LLP | COMPANY |
| 1 | Law governing | Limited Liability Partnership Act, 2008 | Companies Act, 2013 |
| 2 | Charter documents | LLP Agreement | MOA (Memorandum of Association) & AOA (Article of Association) |
| 3 | Partners/Member | Minimum 2 & Maximum-No limit | In Private co. Minimum 2 & Maximum 200,
(In Public co. Minimum 7-Maximum-no limit) |
| 4 | Management | Partners/Designated partners | Board of Directors |
| 5 | Meeting | Not Mandatory | Minimum 4 board meetings in FY, with maximum gap of 120 days between 2 meeting. And one annual general meeting is required. |
| 6 | Statutory audit | Not Mandatory unless annual turnover > Rs. 40 lakhs/ partners Contribution > Rs.25 lakhs. | Mandatory |
| 7 | Regulatory compliance | Low | High |
| 8 | Taxes applicable | Income tax only | Income tax, Dividend Distribution Tax (DDT) |
| 9 | Registers and records | Not required to maintain any Registers, Records and Minutes unless specifically mandated by LLP agreement | Required to maintain lot of Registers, Records and to keep Minutes of Board Meetings and General Meetings from time to time irrespective of doing business or not |
| 10 | Annual filings | Form 8 & 11 | Form AOC-4 & MGT-7or 7A |
| 11 | ESOP (Employee stock option plan) to employees | Not applicable | Can issue ESOP for attracting Employees. |
| 12 | Possibility of External funding | Reasonable as investment in LLP is less attractive option | High as investment in company is more attractive option |
| 13 | Winding up process | Easy | Complex |
Akansha Rathi and Associates (ARACS), Company Secretary Firm in Navi Mumbai is engaged into compliance related services. We have a team of experts who not only possess required skills and experience but also have worked in complex business environment and were engaged in providing complex solutions in terms of providing related Compliance services to our clients.