Benefits of Converting an LLP into a Private Limited Company 

1. LLP Statutory Returns: Ensure that the LLP has filed all required statutory returns (annual returns, income tax returns, etc.) up-to-date.
2. LLP Agreements: File all LLP agreements and supplementary agreements with the Registrar of Companies (RoC).
3. Approved Forms: Verify that all filed forms have been approved by the RoC. If not, complete all pending filings.
4. Company Name: Decide on a new company name. The same name can be used if available, but “Private Limited” must be added.
5. Capital Contribution: Ensure that the capital contribution in the LLP equals the capital of the new company. There should be no change in the amount.
6. Partner Conversion: All partners in the LLP will automatically become shareholders of the new company.
7. Professional Certificate: Obtain a certificate from a Chartered Accountant (CA) or Company Secretary (CS) confirming the accuracy of the LLP’s financial statements.
8. Partner Resolution: Hold a partner meeting and pass a resolution agreeing to the conversion and authorizing a partner to handle the necessary procedures.
9. Name Application: Apply for a new company name on the MCA Portal under the SPICE+ category.
10. Name Approval: The approved name will be valid for 20 days for a new company and 60 days for a change of name.

 REQUIREMENTS

1. There must be atleast two members for registration as private limited company.
2. LLP must be registered, if it is nor registered file application for its registration.
3. Approval from all partners is required.
4. No objection certificate (NOC) is required from ROC where such LLP is registered.

 PROCESS OF CONVERSION

1.  Name Approval: Name Approval has to be obtained from the ROC (Registrar of Companies) by submitting an application in e-format. To apply for this, you need to choose various items that are mentioned in the form INC-1. The name once accepted by the authority will be valid for 60 days.
2. Director Identification Number and Digital Signature: In case all 7 members, who are future directors of the company after conversion, do not have the Digital Signature Certificate (DSC) and Director Identification Number (DIN)for all the future directors of the company must be obtained. For obtaining the DIN, an application form must be filed on MCA portal. DIN application is processed & approved by central government via the office of regional director, the ministry of corporate affairs. The form must be accompanied by self-attested address proof and identity proof with 1 recent passport size color photo of the applicant. All the required documents should be attested by a practicing cost accountant or a practicing chartered accountant or a practicing company secretary.
3. Newspaper Publication: After the name is approved and DSC is generated, we need to issue newspaper publication related to such conversion of LLP into a Private Company, in at least two newspapers, one in English Language and another in any regional language newspaper of the place of registered office.
4. Form Filing: File Form URC-1, SPICE+, and other related forms with the Registrar of Companies (RoC). The following are forms required to be filed along with list of documents  required:
   1. URC-1: After getting the approval of name from Registrar of Companies, the applicant must prepare & file the form No URC-1 in addition to the following documents.
      1. List of the members with various details viz. names, address, shares held by them appropriately, etc.
      2. List of the first directors of the private company with various details viz. names, address, the DIN, passport number with an expiry date, etc.
      3. An affidavit from every person proposed as first directors, that he is not banned to be a director under section-164 and all the necessary documents filed with the registrar for the registration of firm must contain information which is complete and correct & true to be best of his belief and knowledge.
      4. A list including the names & addresses of partners of LLP and a copy of LLP agreement & certificate of registration duly verified by two designated partners of LLP must be enclosed.
      5. A statement indicating the following specifications:
         1. the nominal share capital of firm & the number of shares into which it is separated.
         2. the number of shares taken & the amount paid for every share.
         3. the name of the firm, with the addition of word Limited or private limited is required.
         4. A written consent or No objection certificate from all creditors.
         5. Copy of newspaper advertisement, statement of accounts of the company which must not be 6 days preceding the date of the application and it must be duly certified by the auditor.
   2. SPICE+ Form (INC-32): This is the central form for incorporating a company in India.  It serves as a multi-purpose form, encompassing functions like company registration, director appointment, and issuing a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN). The form will require details like:
      1. The proposed name of the new Private Limited Company.
      2. Registered office address of the Company.
      3. Details of the directors (including their DINs).
      4. Subscriber details (existing partners who will become shareholders).
      5. Share capital structure of the company (authorized and paid-up capital).
      6. Details of the LLP agreement (including any amendments for conversion).
   3. Statement of Conversion: This document formally declares the intention of the LLP to convert to a Private Limited Company.  It should be prepared on the LLP’s letterhead and signed by all partners. The statement should mention the following:
      1. Name of the LLP
      2. The resolution passed by the partners for conversion (including the date of the meeting)
      3. Details of the new Private Limited Company (proposed name, share capital)
   4. LLP Agreement (with Conversion Clause): While the existing LLP agreement will continue to govern the pre-conversion period, it’s essential to ensure it includes a clause outlining the conversion process. If such a clause isn’t present, a supplementary agreement needs to be drafted specifically for the conversion. This agreement should address:
      1. The process for converting assets and liabilities of the LLP to the new company.
      2. Distribution of shares in the new company to existing partners.
      3. Any changes to profit-sharing ratios or management structure.
   5. No-Objection Certificate (NOC) from Creditors: To ensure a smooth conversion, it’s advisable to obtain a No-Objection Certificate (NOC) from all creditors of the LLP. This document confirms that the LLP has settled all outstanding dues with its creditors and there are no impediments to the conversion.
   6. No-Objection Certificate (NOC) from Partners: A written NOC from each partner of the LLP signifies their formal consent to the conversion process. This demonstrates unanimity among partners and helps avoid potential roadblocks during the conversion.
   7. Additional Documents: You may also need additional documents like a detailed statement of assets and liabilities or a certificate of no-encumbrance on LLP property. Once you’ve got your DINs, DSCs, partner approval, and the conversion documents drafted, you’ll be ready to submit them to the RoC and move on to the next stage!
5. Memorandum and Articles of Association: Memorandum of Association (MoA) & Article of Association (AoA) is to be formulated and then filed with RoC after getting the name approval and sanction of form no. URC-1 – from the registrar. The conversion process provides certain tax benefits, however for availing the same several additional requirements needs to be met, for instance, maintaining the same shareholding by the partners as was in the previous LLP when the conversion takes place, for five years from conversion the former partners of such LLP who are now shareholders in the newly formed company cannot in total have shareholding less than 50 percent.

There is another option available for the LLP which is to establish a separate private limited company and after that get the whole business transferred to the private company with the help of a written agreement, in such case the restrictions mentioned above such as need for minimum 7 partners, newspaper publication, etc. are not needed to be met. However, in this situation, there is a levy of capital gain tax. Moreover, stamp duty implication is also applicable to such transfer.

 TIME REQUIREMENT