CONVERSION OF PARTNERSHIP FIRM TO AN LLP

CONVERSION OF PARTNERSHIP FIRM TO AN LLP

There has been a trend of conversion of a partnership firm to an LLP in the recent years and you know why? It is because of the flexibility offered by the LLP, Like unlimited partners, limited liability that saves the partner’s personal asset being drawn to pay-off the liability of the firm. The structure of an LLP is more suitable for MSMEs. 

PARTNERSHIP FIRM VS LLP

BASIS	PARTNERSHIP	LLP
Legal status	Not a separate Legal entity	It is a separate Legal entity
Liability	Unlimited liability of the members of the partnership firm.	Limited to the extent of share held by them in the LLP.
Book Keeping	Not mandatorily required by law	Should be prepared as per the provisions of the LLP Act.
Number of Members	20- Maximum in general businesses and 10- in case of Banking businesses	No upper Limit on the number of partners
DSC	Not required as per the Partnership Act.	It is mandatorily required for all the designated partners of an LLP.

PREREQUISITES FOR CONVERTING A PARTNERSHIP TO LLP

Sec 55 read with Schedule II of the LLP Act, 2008 governs the process of conversion of a Partnership firm to an LLP and it should be done as defined.
The partners of a partnership firm should be the partners of the LLP, that means upon the formation of a new LLP the prior partners should become partners and there should be no introduction of new partners in the newly formed LLP.
It is mandatory requirement for the partners of an LLP to hold a DSC and DPIN for at least two partners before making an application for DSC.
The existing partnership which is to be converted should be registered under the Partnership Act, 1932.
There shall be a mutual consent of the partners for the said conversion.
All the partners of the existing partnership firm should first become partners of the LLP and after that they can leave upon the conversion the firm.

STEP BY STEP PROCEDURE OF CONVERSION

STEP 1: Approval of Name and DSC

STEP 2: Filling FORM-17 for conversion of a partnership firm to LLP

STEP 3: Filling of FiLLip

STEP 4: Issue of ROC

STEP 5: Submission of LLP Agreement in FORM-3 within 30 days.

STEP 6: Intimation to Registrar Certificate By registrar of firms in FORM-14 within 15 days of Incorporation.

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WHY US?

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