What is Private Limited Company to LLP Overview
A registered limited company in India (Private or Public) has a lot of complex formalities and incurs additional overheads for managing affairs including mandatory board meeting, maintenance of statutory records, filling of e-forms with MCA etc. Absence of such mandates for LLP combined with advantages such as non-applicability of dividend distribution tax on profit repatriation, transfer of profit rules and deemed dividend profit issues, makes it a profitable approach for small scale private limited companies to convert from Private Limited to LLP.
Documents Required For Private Limited Company to LLP
- Certification of Incorporation/Incorporation Documents
- Audited Financials and latest ITR copy along with latest AOC-4 and MGT-7
- NOC from creditors.
- NOC from Income tax Department/Other Department as the case may be
- List of pending litigation
Benefits Of Private Limited Company to LLP
- Drafting of MOA/AOA
- Company PAN Card
- Company TAN Number
- GST Registration
- Notary Charges & Cost for Stamp Paper
FAQs On Private Limited Company to LLP
Following are the conditions for conversion:
On conversion of the Company/partnership into LLP, all tangible (movable or immovable) and intangible property vested in the company, all assets, interests, rights, privileges, liabilities, obligations relating to the company/firm and the whole of the undertaking of the company shall be transferred to and vest in the Limited Liability Partnership without further assurance, act, or deed.
It has been provided in the Act that on conversion, any approval, permit or license issued to the Private Company under any other Act shall; subject to the provisions of such other Act under which such approval, permit or license was issued, be transferred in the name of converted entity viz. LLP. Barring some registrations like GST or which a new application needs to be filed.
LLPs are required to file an annual filing with the Registrar each year. However, if the LLP has a turnover of fewer than ₹40 Lakhs and/or has a capital contribution of fewer than ₹25 Lakhs, the financial statements needs no auditing.
A basic difference between the LLP and a company lays in the internal governance structure. The LLP has more flexibility and less compliance requirements compared to a Company.
Yes, the LLP Act 2008 allows Foreign Nationals including Foreign Companies & LLPs to incorporate LLP in India, provided at least one designated partner is resident of India. However, the LLP/Partners would have to comply with all the relevant Foreign Exchange Laws/ Rules/ Regulations/ Guidelines.
In case of conversion to LLP, the decision regarding capital gain, whether applicable or not, is subject to certain conditions. Any transfer of the capital asset or intangible asset or shares held in the company by a shareholder as a result of the conversion of the company into a Limited Liability Partnership would not be subject to Capital Gain. But if there is a change in shareholding i.e. change in the profit sharing ratio and benefit arises from the conversion, then the capital gain would be payable.
In most cases, the terms of the license become the deciding factor whether or not they can be transferred. Otherwise, fresh GST registration or FSSAI registration would have to be obtained by the promoters.
The application of PAN and TAN in the name of LLP shall be applied after the issuance of Certificate of Incorporation of LLP. The physical copy of the PAN will be received at the Registered Office only after being dispatched by the Income Tax Department.
The approved name of LLP shall be valid for a period of 3 months from the date of approval.
No. One of the requisite of an LLP is to carry on business for profit.
All tangible as well intangible property vested in the firm, all assets, interests, rights, privileges, liabilities, obligations relating to the firm and the whole of the undertaking of the firm shall be transferred to and shall vest in the LLP without further assurance, act or deed.
The accumulated loss and unabsorbed depreciation of firm is deemed to be loss/depreciation of the successor LLP for the previous year in which conversion was effected. Thus such loss can be carried for further eight years in the hands of the successor LLP.
Every LLP is required to maintain annual accounts reflecting true and fair view of its state of affairs. A statement off accounts and solvency shall be filed by every LLP with the registrar of LLP every year.
If the LLP has a turnover of Rs.40 lakhs or more and/or has a capital contribution of Rs.25 lakhs or more, the financial statements should be audited.
