Question 4 OR (a)

Conversion of a partnership firm into an LLP: procedure and effects

9 marks

Time to write
About 18 minutes

From an older CBCS paper

Question

Question 4 OR (a) · 9 marks

Under the LLP Act, 2008, Explain the procedure for conversion of a partnership into an LLP, and its effects.

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

18 minfor 9 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 55 and eligibility 2 marks 4 min
  3. 2 Filing, registration and refusal 3 marks 5 min
  4. 3 Effects of conversion 4 marks 7 min
  5. Check: every ask answered, key terms underlined 1 min

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

Try it first. About 18 minutes for 9 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 55 of the Limited Liability Partnership Act, 2008 allows a firm to convert into an LLP in accordance with the Second Schedule.

Picture itConversion of a partnership firm into an LLP: procedure and effects

1All three partners of the firm sign the conversion together—and nobody else.

EligibilityThe partners of the proposed LLP comprise all the partners of the firm and no one else.

2The new LLP certificate goes up on the wall; the firm's old board lies on the floor.

Effect of registrationThere is an LLP by the name specified in the certificate; the firm is deemed to be dissolved.

3An old bill from the firm's days still reaches the partners themselves.

Partners' existing liabilitiesEach remains personally liable, jointly and severally with the LLP, for the firm's liabilities and obligations incurred before the conversion.

Procedure:

  1. Eligibility (para 3). A firm may apply to convert only if the partners of the LLP into which it converts comprise all the partners of the firm and no one else.
  2. Statements to be filed (para 4). The firm files with the Registrar a statement by all its partners in the prescribed form and with the prescribed fee, containing the firm's name and, where applicable, its registration number and the date on which it was registered under the Indian Partnership Act, 1932 or any other law, and the incorporation document and statement referred to in section 11.
  3. Registration (para 5). The Registrar registers the documents and issues a certificate of registration stating that the LLP is registered on and from the date specified in it; where the firm was registered under the Indian Partnership Act, 1932, the LLP informs the Registrar of Firms with which it was registered of the conversion within fifteen days.
  4. Refusal (para 6). The Registrar may refuse to register if not satisfied with the particulars, subject to an appeal to the Tribunal.

Effects of conversion (para 7): on and from the date in the certificate,

  • there is an LLP by the name specified in the certificate;
  • all tangible and intangible property vested in the firm, all its assets, interests, rights, privileges, liabilities and obligations, and the whole of its undertaking, are transferred to and vest in the LLP without further assurance, act or deed; and
  • the firm is deemed to be dissolved and, if it was registered under the Indian Partnership Act, 1932, removed from the records kept under that Act. Where any such property is registered with an authority, the LLP must notify that authority of the conversion (para 8).

Where the 9 marks sit

#ComponentMarks
1Section 55 and eligibility2
2Filing, registration and refusal3
3Effects of conversion4
Total9
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