There are 3 possible conversions procedures allowed by Ministry of Corporate Affairs (MCA):-
Below are discussed the steps and procedures for such conversions.
To convert partnership firm into limited liability partnership (LLP) one needs to comply with various requirements. The conversion of Partnership Firm into LLP is not a cumbersome process, one need to comply with the legal & procedural formalities and the steps which are required to be followed to convert Partnership Firm into LLP are as follows –
A Partnership Firm which desires to convert its status to LLP Form shall foremost decide the designated Partners of the proposed LLP, as only the partners of the partnership firm can be the Partners of the converted LLP and no one else and of these partners of the partnership Firm at least two Partners would be the Designated Partners.
A person ‘Resident in India’ means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one year. ‘Designated Partner’ means a partner who is designated as such in the incorporation documents or who become a designated partner by and in accordance with the Limited Liability Partnership Agreement.
Designated Partner Identification Number (DPIN): Section 7 (6) of LLP Act 2008, provides for every Designated Partner to obtain a DPIN from the Central Government.
DPIN is an eight digit numeric number allotted by the Central Government in order to identify a particular partner and can be obtained by making an online application in eForm 7 to Central Government applying with prescribed fees.
Digital Signature Certificate: All the forms like eForm 7, eForm 1, eForm 2, eForm 3 etc. which are required for the purpose of incorporating the LLP are filed electronically through the medium of Internet; it is not possible to sign them manually. Moreover the DPIN Form is to be signed by the concerned Designated Partner himself. Therefore, for the purpose of signing these forms, all the Designated Partner of the proposed LLP needs to obtain a Digital Signature Certificate (DSC) from government recognized DSA’s. The signatures shall also be required for signing and filing of all relevant forms and documents to be filed, annually or event based after incorporation of the LLP, asking for approvals or as intimation.
Likewise the manual signatures, digital signature certificates are individual specific and no partner to obtain more than one.
The next step is to make an application in eForm 1 of Rule 18(5) of the Limited Liability Partnership Act 2008, for reservation of the desired name of the LLP on payment of the prescribed fees.
A Board resolution passed by the Company approving the conversion into LLP shall be attached with the aforesaid form.
The next pertinent step is drafting of Limited Liability Partnership Agreement governing the mutual rights and duties among the partners and among the LLP and its partners.
The basic contents of Agreement are:
It is not necessary to have the LLP Agreement signed at the time of incorporation, as the details of the same needs to field in eform 3 within 30 days of incorporation but in order to avoid any dispute between the partners as to the terms & conditions of the agreement after the conversion into LLP, it is always beneficial to have the LLP Agreement drafted and executed before the incorporation of the LLP.
Next is the filing of Incorporation documents, and declaration electronically through the medium of e-forms prescribed with the Registrar of LLP for incorporation of the LLP on payment of prescribed fees based on the total monetary value of contribution of partners in the proposed LLP.
This is an informative document setting down the details of LLP, its Partners including designated partners along with their amount of contribution and consent for forming a Limited Liability Partnership to carry on a lawful business with profit motive along with declaration stating that all the requirements of Limited Liability Partnership Act, 2008 regarding incorporation of LLP in India have been complied with.
Subscription Sheet: The partners are required to subscribe their names along with signatures to the subscription sheet, which shall be witnessed by any chartered Accountant/Company Secretary/Advocate in practice.
Application for conversion in eForm 17 to be submitted by the partners of the partnership name covering name, details of address & registration (if any), consent of all partners of the Firm along with following details:
All the eforms will be digitally signed by any designated partner and shall be certified by an advocate/company secretary/chartered accountant/cost accountant in practice engaged in the formation of LLP.
On all formalities and filings been comply with by the applicants and approved by the Ministry, Registrar of LLP to issue a Certificate of Registration as to Conversion of the LLP. The Certificate of Registration issued shall be the conclusive evidence of conversion of the LLP.
In the event, Registrar has refused the registration, the applicant company, may apply to the Tribunal within sixty days from the date of receipt of such intimation of refusal.
This form provides for the necessary information in respect to the LLP Agreement entered into between the partners.
Consent of each partner to become a partner of Limited Liability Partnership to be filed with the Registrar of LLP