Overview of Conversion of LLP to Private Company
There are businesses in India that begin their journey as a Limited Liability Partnership (LLP) but now are keen on converting into a private limited company for more growth and prosperity in business.
The Limited Liability Partnership Act, 2008 has no provision related to the conversion of an LLP into a Private Limited Company, but Section 366 of the Companies Act, 2013 and Company (Authorised to Register) Rules, 2014 states that an LLP can be converted into a Private Limited Company.LLP is good for small businesses with an annual sales turnover of fewer than Rs 40 lakhs and a capital contribution of fewer than Rs 25 lakhs. LLPs that satisfy these conditions do not have to go through an audit every year; on the other hand, a private limited company must conduct an audit of its financial statement each year.
Documents Required for Conversion of LLP into a Private Limited Company
The List of documents required for conversion is as follows:
Address Proof of the applicant
Identity Proof of the applicant
Passport size photographs of the applicant
Copy of latest returns file by the Limited Liability Partnership
The NOC was obtained from members of LLP and the Registrar.
Reason for Conversion of an LLP into a Private Limited Company
The followings are the reasons for converting an LLP into a Private Limited Company:
LLP converts into a private company for growth and to extend its existing business.
LLP can attract only a few types of investors, so to attract more investors, such as foreign investors or equity investors, they go for conversion.
The LLP is converting for issuing equity share capital in the private limited Company.
One of the reasons for conversion is to avoid capital tax gain.
