Llp conversion into pvt ltd company

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REGAN KAPOOR (Querist)
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24 February 2013 can an LLP be converted into a private limited company ??..... to me it seams yes using anology of partnership firm conversion into company...... m i right ????

Nikhil Kaushik

Nikhil Kaushik (Expert)
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25 February 2013 I don't think this is currently permitted.

Other experts may please correct me if I am wrong.

http://www.mca.gov.in/LLP/faq_conversion.html

Ajay Mishra

Ajay Mishra (Expert)
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25 February 2013 Hi

The expression “Joint Stock Company” is not the same thing as “Company” as defined in section 3 of the Companies Act, 1956 (the Act). Section 3 of the Act, which deal with definitions of different kind of company, does not use the expression “Joint Stock Company” and although this expression contains the words “Company”, it has not been used in the same sense in which section 3 used it. Throughout Part IX the word “Company” seems to have been used as meaning “Joint Stock Company” and not as meaning “Company” as defined in section 3 of the Act. [Valti Pattabhirama Rao v Sri Ramanuja Ginning & Rice Factory Pvt. Ltd. (1986)].
A “Joint Stock Company” means a company or association consisting of a number of Individuals organized to conduct a business for gain with a joint stock, the shares owned by any member being transferable without the consent of the rest.
Therefore the LLP may be converted into a company by following the provisions of Part IX of the Act. Section 565 to 581 deal with conversion of entities in to a company under the Companies Act, 1956. However, there is no clarity under the Companies Act, 1956 and the MCA has given comments that necessary amendments may be considered under the Companies Act, 1956.
Section 56 of the Limited Liability Partnership Act, 2008 provides that a private company may convert in to LLP in accordance with the provision of Chapter X and the Third Schedule and unlisted public company may convert into a LLP in accordance with the provision of Chapter X and Fourth Schedule to the LLP Act, 2008.
The provisions of section 56, 57 and 58 and the Third and Fourth Schedule related to conversion of private limited or unlisted public company in to LLP have come into effect from 31.05.2009 vide Notification No. SO 1323 (E), dated 22.05.2009.
The MCA has vide Notification No. SO 1324 (E), dated 22.05.2009 appointed 31.05.2009 as the date on which Rules 39 and 40 of the Rules, 2009 related to conversion private limited or unlisted public company in to LLP have come into effect along with Rule 32 and 33.

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