Turning a private company into an LLP

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 (a) no security interest in its assets subsists or is in force at the time of application, and (b) the partners of the LLP comprise all the shareholders of the company and no one else. On conversion, the company, its shareholders, the LLP and its partners are bound by the Schedule.
2. Statements to be filed (para 3). The company files with the Registrar (a) a statement by all its shareholders, in the prescribed form and with the prescribed fee, giving the company's name and registration number and the date of its incorporation; and (b) the incorporation document and the statement referred to in section 11.
3. Registration (para 4). The Registrar, subject to the Act and the rules, registers the documents and issues a certificate of registration stating that the LLP is registered on and from the date specified in it; within fifteen days the LLP must inform 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, and may require the documents to be verified.

Effect of registration (para 6): on and from the date in the certificate,

• 1. there is an LLP by the name specified in the certificate;
• 2. all the company's property, 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
• 3. the company is deemed to be dissolved and is removed from the records of the Registrar of Companies. Where any such property is registered with an authority, the LLP must notify that authority of the conversion (para 7); proceedings pending by or against the company may be continued by or against the LLP (para 8).

Conclusion. A private company with no subsisting security interest whose shareholders all become partners can become an LLP by filing the Third Schedule statements; on registration its undertaking vests in the LLP and the company is dissolved.