Conversion of a partnership firm into an LLP
A partnership firm converts into a limited liability partnership under the Second Schedule of the LLP Act, 2008. Company Suggestion files Form 17 with FiLLiP and tells the Registrar of Firms.
How does a partnership firm become an LLP?
Section 58 of the LLP Act, 2008 lets a firm that has complied with the Second Schedule be registered as an LLP. The Registrar issues a certificate in Form 19.
On conversion, the partners of the firm and the LLP are bound by that Schedule. The firm’s partners become the LLP’s partners.
In the firm, each partner is personally liable for the firm’s debts. In the LLP, liability stops at the contribution agreed in the LLP agreement.
Who should convert a firm into an LLP?
Two plans fit this conversion:
- Partners who want limited liability and will not issue shares.
- A professional firm that wants to keep the same partners.
A firm that will issue shares should register as a private limited company instead. A proprietorship is not a firm, so it cannot use this Schedule. That route is a new LLP.
Which documents does Form 17 need?
Form 17 is filed with four attachments.
- The partnership deed
- A statement of the partners and the contribution each will make
- Consent of the partners to act as partners of the LLP
- The declaration in Part B of Form 17 by the designated partners
What are the conversion steps?
Company Suggestion files the conversion in five steps.
- Each designated partner gets a digital signature. A DIN can be taken with FiLLiP when there are two designated partners.
- FiLLiP reserves the name and is filed with Form 17.
- The Registrar issues the certificate of registration in Form 19.
- The partners sign the LLP agreement, and Form 3 files it.
- Within 15 days the LLP informs the Registrar of Firms in Form 14, with a copy of the incorporation documents.
Frequently asked questions
4 questions cover the rules that decide this registration.
Which schedule converts a firm into an LLP?
The Second Schedule of the LLP Act, 2008. The application is Form 17, filed with FiLLiP. The Registrar issues the certificate in Form 19.
Can an LLP convert back into a partnership firm?
No. The LLP Act and the LLP Rules, 2009 do not provide a conversion from an LLP back into a partnership firm.
Must the Registrar of Firms be told?
Yes. Within 15 days of registration the LLP informs the Registrar of Firms in Form 14.
Do the same partners continue?
Yes. The partners of the firm become the partners of the LLP. A partner’s liability in the LLP stops at the agreed contribution.