Conversion of limited company into LLP

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Converting a limited company to an LLP involves specific rules, particularly regarding profit sharing. For five years post-conversion, existing shareholders must collectively hold at least 51% of the profit sharing ratio in the new LLP. This doesn't prevent dissolution within that period, but applies if the LLP continues. Dissolution is possible sooner, and immovable properties can be sold, though capital gains tax will apply.

Kinjal Thakkar

Kinjal Thakkar (Querist)

08 May 2023 the aggregate of the profit sharing ratio of the shareholders of the company in the limited liability partnership shall not be less than fifty per cent at any time during the period of five years from the date of conversion; (i.e you can take new partners in the LLP, but all the previous shareholders who became partners in LLP share should remain at least 51% for 5 years from conversion.)

Does this mean that the converted LLP cannot be dissolved for a period of 5 years? What if there is death of the main partner and thus there is no income in the company. The remaining partners want to sell the assets and wind up the company