Conversion of Company to LLP (Procedure Tax Stamp Duty)

Conversion of Company into LLP (Tax Implications, MCA Stamp Duty for Conversion) : We have below articulated a detailed view of the Procedure for Conversion of a Private Company into LLP. This editorial includes, the Documents to be submitted for the conversion, what is the fee for conversion, What are the Tax implications when a company is converted to a LLP and stamp duty that is to be paid to the Ministry of Corporate Affairs. Below we have provided various forms that you need to submit to the MCA for the conversion to be approved and also respective eligibility criteria.

How to Convert of Company into LLP

Conversion Duration 8-10 days
Conversion Forms 2 & 18
Online Procedure Mandatory

Step 1 : Obtain DIN No of all proposed Designated Partner/ Partner.

DIN Application Procedure
  1. Self attested Pan Card
  2. Self attested Address Proof

Same is to be attached in DIN Form DIR-3 after attestation of Professional. Also, DSC of the applicant as well as Professional is required to be attached.

DIN of the directors of the Company would already be there. However, if any shareholder of that Company want to be the Partner in LLP, Then his DIN No is mandatory. Otherwise, DIN No of Directors would suffice for being Designated partners in LLP.

Step 2 :  Form 1 is to be filed first for Conversion of Company into LLP

Attachment of Form 1:
  1. Board Resolution for conversion is to be attached.

We shall receive the Name Approval Certificate once the form is approved of the same.

Eg: If the name of the Company was ABC Pvt Ltd, for conversion of LLP you will get the name as ABC LLP. Name will remain the same. Only suffix would change.

Step 3 :  Form 18 & 2 is required to be filed under Linked Form

Form 18 is for Application and Statement for conversion of a private company/ unlisted public company into limited liability partnership (LLP). Form 2 is for Incorporation document and subscriber statement.
Attachment of Form 18
  1. Consent of Shareholders for conversion
  2. Annual set of Accounts not older than 30 days from date of filing.
  3. Latest Acknowledgment of ITR Return
  4. Declaration stating that Company shall not borrow funds as per RBI Act, SEBI Act and Companies Act, 2013 until Company gets converted into LLP.

Attachment of Form 2

  1. Address Proof not older than 2 months.
  2. NOC from the Owner of Premises to use the premises as Registered office Address Proof
  3. Subscribers Sheet (Hand written).
  4. Interest in other entity.

We shall receive the Certificate of Incorporation with the approval of Form 18 & Form 2.

Step 4 : File Form 3

After receiving Certificate of Incorporation, file Form 3 with ROC which is Information with regard to limited liability partnership agreement.

Attachment  for Form 3 : LLP Agreement.
With all the four steps mentioned above, the procedure for conversion of a Private Limited Company into a a LLP is totally completed.

Our Other Articles on Company Law

Classification of Companies under the Companies Act 2013

  • Classification on the basis of Incorporation: There are three ways in which companies may be incorporated.
    1. Statutory Companies: These are constituted by a special Act of Parliament or State Legislature. The provisions of the Companies Act, 2013 do not apply to them. Examples of these types of companies are Reserve Bank of India, Life Insurance Corporation of India, etc.
    2. Registered Companies: The companies which are incorporated under the Companies Act, 2013 or under any previous company law, with ROC 1 fall under this category.
  • Classification on the basis of Liability: Under this category there are three types of companies:
    1. Unlimited Liability Companies: In this type of company, the members are liable for the company’s debts in proportion to their respective interests in the company and their liability is unlimited. Such companies may or may not have share capital. They may be either a public company or a private company.
    2. Companies limited by guarantee: A company that has the liability of its members limited to such amount as the members may respectively undertake, by the memorandum, to contribute to the assets of the company in the event of its being wound-up, is known as a company limited by guarantee. The members of a guarantee company are, in effect, placed in the position of guarantors of the company’s debts up to the agreed amount.
    3. Companies limited by shares: A company that has the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them is termed as a company limited by shares. For example, a shareholder who has paid `75 on a share of face value ` 100 can be called upon to pay the balance of `25 only. Companies limited by shares are by far the most common and may be either public or private.
  • Other Forms of Companies
    1. Associations not for profit having license under Section 8 of the Companies Act, 2013 or under any previous company law;
    2. Government Companies;
    3. Foreign Companies;
    4. Holding and Subsidiary Companies;
    5. Associate Companies/Joint Venture Companies
    6. Investment Companies
    7. Producer Companies.
    8. Dormant Companies

Conclusion : Conversion of Company into LLP (Procedure Tax Stamp Duty)

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