How to Convert LLP to Private Limited Company?
Conversion of a Limited Liability Partnership (LLP) to a Private Limited Company is not prescribed in the LLP Act, 2008. The Act is silent about such conversion and so is Companies Act, 2013. As on date the only procedure available for conversion is prescribed by Companies Act, 1956 which is old. Alternatively a person who wants to do such conversion can simply dissolve the LLP and start a new company.
The procedure for voluntary dissolution of an LLP is as follows:
- First a resolution is a passed wherein at least three-fourths of partners must agree with dissolution. The resolution passed must be filed with the Registrar within the next 30 days.
- Once the resolution is filed all the partners who agree with the dissolution must submit their affidavits as to the position of debt and the time period within they'll pay them in full.
- In case the LLP has creditors, prior consent is required from them.
- Along with the above mentioned affidavits, partners are also required to file Statement of assets and liabilities from period since the financial statements were last closed up to the date of winding up. If the LLP owns assets then valuer's report needs to be filed too.
- Simultaneously a liquidator too needs to be appointed within 30 days of passing of resolution but if the LLP has creditors then such liquidator shall be first get approval from at least two-thirds of the creditors in value.
- Then the liquidator needs to wind up the affairs of the LLP and if two-thirds of partners and creditors agree to the terms then a resolution is passed stating the reason for dissolution and closure of accounts. The resolution is then filed with the Registrar and the liquidator shall file an application with Tribunal.
- If the Tribunal is satisfied with the procedures it will give its consent to the dissolution. A copy of the consent is then filed with Registrar along with liquidator's report. The Registrar will then publish a notice in the Official Gazette stating that the LLP now stands dissolved.
The partners can then form a private limited company the procedure for which is stated in the article here.
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