Conversion of an LLP into a private limited company
An LLP converts into a private limited company by registering under section 366 of the Companies Act, 2013. Company Suggestion files URC-1 and SPICe+ and publishes the notice the Act requires.
How does an LLP become a private limited company?
Part I of Chapter XXI of the Companies Act, 2013 lets an existing LLP register as a company. This is not a new business started beside the LLP. The LLP is registered as the company.
The LLP needs at least two partners. After registration the company needs at least two shareholders and two directors.
A private limited company can issue shares. An LLP cannot. That is the usual reason for this conversion. The comparison of a private limited company and an LLP sets out the difference before the filing starts.
Who should convert an LLP?
Two plans fit this conversion:
- Partners who will raise money by issuing shares.
- An LLP that will offer shares to employees.
Partners who will keep funding the business themselves can stay an LLP.
Which documents does the conversion need?
The Registrar asks for seven sets of papers with URC-1.
- The LLP agreement
- A list of partners, with name, address and occupation, and the shares each will hold
- A list of the first directors, and an affidavit from each that section 164 does not disqualify that person
- A chartered accountant’s statement of assets and liabilities
- The latest income-tax return of the LLP
- Written consent from every secured creditor
- Written assent of a majority of the partners
What are the conversion steps?
Company Suggestion files the conversion in five steps.
- The partners assent, and every secured creditor gives a written no-objection.
- SPICe+ Part A reserves the name, with “Private Limited” at the end.
- Form URC-2 is published in an English newspaper and in a newspaper in the local language of the district. Objectors have 21 clear days.
- URC-1 and SPICe+ are filed with the memorandum, the articles and the papers listed above.
- The Registrar issues the certificate of incorporation of the company.
Frequently asked questions
4 questions cover the rules that decide this registration.
Can an LLP convert into a private limited company?
Yes. Section 366 of the Companies Act, 2013 lets an LLP with two or more partners register as a company. The form is URC-1, filed with SPICe+.
Does the LLP keep the same name?
The company can use the LLP’s name if that name is available, with “Private Limited” added. SPICe+ Part A reserves the name.
Is a newspaper notice required?
Yes. Section 374 requires an advertisement in Form URC-2, in English and in the local language of the district, giving 21 clear days for objections.
What happens to the partners?
The partners become shareholders of the company. The company needs at least two shareholders and two directors.