LLP to Private Limited Company Conversion

An LLP converts into a company by registering under Section 366 of the Companies Act, 2013, read with the Companies (Authorised to Register) Rules, 2014. Unlike company-to-LLP conversion, this route runs through the Central Registration Centre using Form URC-1, together with SPICe+ incorporation forms for the company that will emerge.

The typical steps are: partner approval of the conversion, publication of a notice in newspapers inviting objections, collection of creditor no-objection where required, drafting of the Memorandum and Articles, and filing of URC-1 with the statement of partners, assets and liabilities. Once the certificate of incorporation is issued, the LLP's assets and liabilities become the company's, and the LLP is dissolved.

• Equity fundraising: angels and venture funds invest through equity shares, CCPS and CCDs, which an LLP cannot issue.
• ESOPs: employee stock option plans need a company with share capital.
• FDI flexibility: many sectors under the automatic route are easier to access through a company than an LLP.

The Income-tax Act contains a specific capital-gains exemption for company-to-LLP conversion, but there is no equivalent provision for LLP-to-company conversion. The transfer of assets can therefore have tax consequences, and the treatment of accumulated losses and depreciation needs to be assessed before filing.

Figures and timelines above reflect our understanding at the time of writing; confirm against the latest Act, Rules and notifications before relying on them.

After conversion the company takes on full company-law compliance: board meetings, an AGM, statutory audit and annual ROC filings. See Pvt Ltd annual compliance for what the first year looks like.