Private Limited Company to LLP Conversion
When a private limited company no longer fits — convert to LLP for operational flexibility, simplified compliance and pass-through taxation.
When Company-to-LLP Makes Sense
- No external equity funding planned and unlikely in the near term.
- Preference for pass-through taxation and simpler profit distribution.
- Simpler annual compliance — fewer board, ROC and audit obligations at smaller scale.
- Family-run or professional partnership-style arrangements.
The Conversion Process
- Form 18 application under the LLP Act read with Companies Act provisions.
- Board and shareholder approvals and no-objection from creditors.
- ROC filing and LLP incorporation under the new LLP name.
- PAN/GST/bank/licence transition into the LLP.
- Closure of legacy company filings and final ROC formalities.
Our Support Scope
- Eligibility and tax review — including capital gains and accumulated profits.
- Form 18 preparation and complete MCA filing.
- Drafting of LLP agreement aligned to current business reality.
- GST, bank account and licence migration coordination.
- Post-conversion filings and ongoing compliance setup.
How a company converts into an LLP
A private limited company, or an unlisted public company, can convert into a Limited Liability Partnership under Section 56 and the Third Schedule of the Limited Liability Partnership Act, 2008. The conversion is a statutory one: the company's assets, liabilities, contracts and proceedings vest in the new LLP without a separate transfer deed, and the company is treated as dissolved once the Registrar registers the LLP.
The usual sequence is name reservation for the LLP, a board and shareholder resolution approving the conversion, consent of every shareholder to become a partner, a statement of assets and liabilities certified by a Chartered Accountant, and the conversion filing with the MCA. After registration the LLP must intimate the conversion to every authority with which the company was registered, from the income tax department to GST and labour authorities.
Who is eligible, and when it makes sense
- All shareholders of the company must become the partners of the LLP, and nobody else can join at the point of conversion.
- There should be no security interest in the company's assets that is subsisting or in force at the time of application, unless the charge-holder agrees.
- Conversion suits owner-managed companies that no longer need share capital, want lighter annual compliance and no mandatory statutory audit below the LLP audit thresholds, and do not plan to raise equity from investors.
The tax-neutrality conditions
Section 70 of the Income-tax Act, 2025 (formerly section 47(xiiib)) exempts the transfer of assets on conversion from capital gains only if strict conditions are met, including limits on the company's turnover and total assets in the preceding years, shareholders becoming partners in the same proportion as their shareholding, no consideration other than a share in the LLP's profits and capital, a continuing minimum profit share for the former shareholders, and no payment out of accumulated profits for a set period after conversion. Breach of a condition later can withdraw the exemption retrospectively, so the post-conversion years need monitoring.
Figures and timelines above reflect our understanding at the time of writing; confirm against the latest Act, Rules and notifications before relying on them.
If the company will need investors later, read our guide to LLP vs Private Limited first. Converting back is possible through LLP to company conversion, but it is a separate process with its own costs.
Practical questions
Do contracts and bank accounts need to be re-signed?
Contracts vest in the LLP by law, but in practice banks, landlords, customers and licensors usually ask for a copy of the conversion certificate and updated KYC, so plan for a short transition window.
Does the GST registration carry over?
The LLP has a new PAN, so GST registration must be obtained afresh and unutilised input tax credit transferred using the prescribed form. Plan the cut-over date around the return cycle.
Move From Pvt Ltd to LLP With Confidence
Eligibility, tax review, Form 18 and full transition — handled end-to-end by our CA team.