Limited Liability Partnership, which is a combination of both company and partnership, is suitable for small to medium sized businesses. Converting a Private Limited Company into a Limited Liability Partnership encompasses the advantage of self-governance and less compliance. A Private Limited Company can be converted into a Limited Liability Partnership if the company has no security interest in its assets at the time of application. The conversion is also possible if the partners of the Limited Liability Partnership will be the shareholders of the company.
A meeting of the Board of Directors needs to be convened in which a special resolution pertaining to conversion of the Private Limited Company to Limited Liability Partnership shall be passed. The board meeting shall also pass resolutions to authorize any director to file all the necessary forms with the Ministry of Corporate Affairs.
The Private Limited Company will have to apply for reservation of name for the proposed Limited Liability Partnership. RoC approves the request for name approval.
Digital Signature Certificate (DSC) and Director Identification Number (DIN) will be required for the designated partners of the Limited Liability Partnership. Obtaining DSC and DIN is the next step of conversion.
E-Form- 18 requires to be filed with ROC along with statement of the consent of shareholders, statement of accounts of the company certified as true and correct by an independent auditor, list of all the secured creditors along with their consent, and a copy of acknowledgement of latest income tax return.
After ample scrutiny, the Certificate of Incorporation will be granted which essentially declares the conversion of the Private Limited Company into Limited Liability Partnership.
Compared to a Private Limited Company, Limited Liability Partnerships have less compliances to follow. Ease of management and scope for self-governance are the other advantages.
Yes, the name of the Private Limited Company will be removed from the Register, once it is converted into a Limited Liability Partnership.
Takeover agreement, also known as Sale agreement, is a pact that the Proprietor and the Company enters into, so as to facilitate the conversion.