to convert pvt ltd compant into LLP

Conversion of Private Limited Company into LLP

This article covers the concept of conversion ofprivate limited company into a LLP. Each shareholder of the private limited company must submit a statement and consent for conversion of a company into LLP along with the application.

Documents Required for Conversion of Company into LLP

The following documents have to be attached along with the application for conversion of company into LLP:

Consent of each of the shareholder of the company for conversion of the firm into LLP in the given format.Incorporation document in Form 2.Form 3- Form of application and declaration of incorporation of an LLP.Clearance/no-objection certificate from tax authorities.Statement of assets and liabilities from the company.List of all the creditors along with their consent.Approval from any other country.Authorization to make declaration.Optional attachments, if any.

Eligibility

A private limited company can be converted into an LLP under the following circumstances:

The company has no security interest in its assets at the time of application.The partners of the LLP will be no one but the shareholders of the company.

Fee Payable for Conversion

The fees payable for conversion are as follows:

LLP whose contribution is limited to Rs 1,00,000 – Rs. 500.LLP whose contribution exceeds Rs 1,00,000 but is limited to Rs 5,00,000 – Rs. 2000.LLP whose contribution exceeds Rs 5,00,000 but is limited to Rs 10,00,000 – Rs. 4000.LLP whose contribution exceeds Rs 10,00,000 – Rs. 5000.

Certificate of Registration

The LLP must intimate the registrar on the conversion of the company into LLP within 15 days from the date of conversion. The intimation must be processed in Form 14. The Registrar, after completion of the requisite formalities, will issue a certificate of registration. If the Registrar denies conversion, the private limited company can file an appeal before the Tribunal.

In case properties are registered in the name of the company, the LLP should notify the details of conversion to those authorities, along with the particulars of LLP.

Effect of Conversion

The following are some of the implication on conversion of a company into a LLP:

The private company will be deemed to be dissolved.The name of the private limited company will be removed from the register of the Registrar of Companies.On conversion, all properties, assets, interests, rights, privileges, liabilities and obligations of the private limited company is transferred to the LLP.The conversion has no bearing on the existing liabilities, obligations, agreements, contracts and continued employment.Permits or licenses issued under any written law to the Private Limited Company, and which is active before the date of conversion will not be transferred automatically to the Limited Liability Partnership. The terms of the license will the deciding factor here. Hence, in most cases, fresh GST registrationor FSSAI registration would have to be obtained by the promoters.

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A private co having secured loan can convert into LLP


what will be income tax treatment on the conversation

The transactions not in covered under section 47(xiiib) is transfer and accordingly capital gain is paid by both the company and the share holders. However, Based on the judicial rulings, and case to case basis, one can opine that the Conversion of Private Limited Company to LLP is not taxable either for transferor company and for the share holders.