LLP Act, 2008 does not cover the conversion of LLP into Company but in Companies Act, 2013 conversion of LLP into Company is covered in section 366.
Please note that recently MCA has notified Companies (Authorized to Register) Amendment Rules, 2018 which shall come into force on 16.02.2018 in which form URC–1 has been revised, which can be used for filing the application by Company for registration under section 366.
COMPANIES CAPABLE OF BEING REGISTERED
The word “Company” for the purpose of this section shall include Partnership Firm (PF), Limited Liability Partnership (LLP), Co-operative Society but exclude Unlimited Company having more than and equals to 7 members, Company limited by shares, Company limited by guarantee.
According to Section 366 of Companies Act, 2013 read with rule 3 & 4 of the Companies (Authorized to Register) Rules, 2014:
SOME PRE-CONDITIONS FOR CONVERSION OF LLP INTO COMPANY LIMITED BY SHARES ARE AS FOLLOWS:.
- Any company registered under the Indian Companies Act, 1882, Indian Companies Act, 1913 & Companies Act, 1956 shall not be allowed for taking registration under this Part.
- The Company shall have at least 7 Members (i.e. an LLP shall consist of at least 7 partners at the time of conversion if there are less than 7 then increase the number of partners first)
- A Company having its liability limited by an act of Parliament shall not register as Unlimited Company or Company Limited by Guarantee under this part (i.e. an LLP can only convert into Company limited by shares).
- The company shall before taking registration, take assent of all the members present & proxies (if allowed) in a general meeting summoned for this purpose.
THE PROCEDURE OF THE CONVERSION OF LLP INTO COMPANY LIMITED BY SHARES IS AS FOLLOWS:
- Check whether the number of members present is more than or equal to 7 or not (if not then increase the number of members first). Duly Conduct a meeting for this purpose and pass a resolution in this regard.
- Obtain availability of name under section 4 of Companies Act, 2013 (record a ‘decision taken’ for this purpose).
- Publish an advertisement in form URC-2 about such registration (seeking objections, if any within 21 days from publication), in English & Vernacular language newspaper circulating in the district in which LLP situate.
- File form URC-1 and attach the following documents in the form as per Rule 3 & 4:
- List showing names, address & occupation of all persons named as members with details of shares held, showing separately shares allotted for consideration in cash & for Consideration other than cash, also a source of consideration. In case shares are numbered, each share by its number who on a day of seeking registration were partners in LLP.
- An affidavit from each proposed first director that the proposed directors are not disqualified under section 164 to hold the position of the Director.
- List of names, addresses of partners of LLP.
- Copy of Limited Liability Partnership Deed (if revised then copy of past deed).
- A statement specifying Nominal share capital, No. of shares taken & amount paid, name of the company with word limited/Pvt. Ltd.
- Consent/NOC from all secured creditors.
- Consent from the majority of members whether present in person or in the proxy (if allowed) in a general meeting held for this purpose.
- Undertaking that proposed directors shall comply with the requirements of the Stamp Act.
- Statement of asset/liabilities certified by Chartered Accountant in Practice made for not earlier than 30 days from filling URC-1.
- Copy of latest Income Tax Return of LLP.
- Copy of notice published in Newspaper and proof of service to ROC.
- Declaration and statement of proceedings (if pending before any court/tribunal/ authority) shall be submitted with URC-1 that they have complied/filed all documents which are required to be filed under LLP Act & no any default persist till now.
Well enough! You have completed your part of duty now the part of the duty of the registrar begins……….Registrar shall within 30 days from filing the form, decide whether registration will be granted or not. If ROC is satisfied with the documents presented then may issue a Certificate of Incorporation (COI) in form INC-11.
With the issue of COI, the conversion is complete officially in all respect.
Rajput Jain & Associates