Question 5 OR (b)

Conversion of a private company into an LLP

6 marks

Time to write
About 12 minutes

From an older CBCS paper

Question

Question 5 OR (b) · 6 marks

Describe how a private company is converted into an LLP: the procedure of conversion.

Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

12 minfor 6 marks

Read from the question

  • procedureA process: the steps in order, one heading each.

Write it in this order

  1. Read; underline the asks; jot your points 1 min
  2. 1 Section 56 and eligibility 2 marks 3 min
  3. 2 Filing and registration 2 marks 3 min
  4. 3 Effect of registration 2 marks 3 min
  5. Check: every ask answered, key terms underlined 2 min

Short on time? Trim steps 1–3 evenly rather than skip one: each is capped at its own marks.

Try it first. About 12 minutes for 6 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Rule. Section 56 of the LLP Act, 2008 allows a private company to convert into an LLP in accordance with the Third Schedule. "Convert" means the transfer of the company's property, assets, interests, rights, privileges, liabilities, obligations and undertaking to the LLP (para 1).

Conditions and procedure.

  1. Eligibility (para 2). A private company may apply to convert only if no security interest in its assets subsists at the time of application, and the partners of the LLP comprise all the shareholders of the company and no one else.
  2. Statements to be filed (para 3). The company files with the Registrar a statement by all its shareholders giving the company's name, registration number and date of incorporation, and the incorporation document and statement referred to in section 11.
  3. Registration (para 4). The Registrar registers the documents and issues a certificate of registration stating the date from which the LLP is registered; within fifteen days the LLP informs the Registrar of Companies of the conversion.
  4. Refusal (para 5). The Registrar may refuse to register if not satisfied with the particulars, subject to an appeal to the Tribunal.

Effect of registration (para 6): there is an LLP by the name in the certificate; all the company's property, assets, rights, liabilities and undertaking vest in the LLP without further assurance; and the company is deemed dissolved and removed from the records of the Registrar of Companies.

Where the 6 marks sit

#ComponentMarks
1Section 56 and eligibility2
2Filing and registration2
3Effect of registration2
Total6
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