Registration of land on conversion of company into llp
RAJNEESH AGGARWAL
(Querist) 12 October 2014
This query is : Resolved
MY CLIENT HAS A PROPERTY IN THE NAME OF THE PRIVATE LIMITED COMPANY IN LUDHIANA, PUNJAB, WHICH WE ARE PROPOSING TO CONVERT INTO LIMITED LIABILITY PARTNERSHIP. I WISH TO CONFIRM WHETHER WE WILL HAVE TO EXECUTE FRESH SALE DEED ON CONVERSION OF THE PRIVATE LIMITED COMPANY TO LLP OR THE CERTIFICATE RECEIVED FROM REGISTRAR OF COMPANIES CERTIFYING THE CONVERSION SHALL BE ENOUGH TO GET THE DESIRED CHANGES IN THE REVENUE RECORDS.PLEASE ADVISE ME IMMEDIATELY.
ABDUL RAZIQUE
(Expert) 13 October 2014
it is better to proceed in execution of fresh deed on conversion.
Anand Bali Adv.
(Expert) 14 October 2014
Dear Client,
At first you have to dissolve your Private Limited Company by duly informing the Registrar of Company and have to get a closure Certificate of the Company and on that very movement you can get yourself registered under a Limited Liability Partnership Firm with the registrar of the Partnership Firms by concluding a Partnership Deed with a memorandum of Understanding among the all Partners.
Though there is no compulsion of the registration of the Partnership Firms however there are many complications can come in future for its non registration so it is advised to get registered your firm with the Registrar under Sec 69 of the Partnership Act 1932. The concept of LLC and LLP are yet to be regulated under the Act in India please note.
Anand Bali Adv.
(Expert) 14 October 2014
Limited liability partnership Act 2018:
Limited Liability Partnership entities, the world wide recognized form of business organization has been introduced in India by way of Limited Liability Partnership Act, 2008. A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization. In an LLP one partner is not responsible or liable for another partner's misconduct or negligence, this is an important difference from that of a unlimited partnership. In an LLP, all partners have a form of limited liability for each individual's protection within the partnership, similar to that of the shareholders of a corporation. However, unlike corporate shareholders, the partners have the right to manage the business directly.An LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP's employees or other agents.
Limited Liability Partnership is managed as per the LLP Agreement, however in the absence of such agreement the LLP would be governed by the framework provided in Schedule 1 of Limited Liability Partnership Act, 2008 which describes the matters relating to mutual rights and duties of partners of the LLP and of the limited liability partnership and its partners.
LLP has a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP. Further, no partner would be liable on account of the independent or un-authorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
Limited Liability Partnership Act, 2008 came into effect by way of notification dated 31st March 2009.
Renowned and accepted form of business worldwide in comparison to Company.
Low cost of Formation.
Easy to establish.
Easy to manage & run.
No requirement of any minimum capital contribution.
No restrictions as to maximum number of partners.
LLP & its partners are distinct from each other.
Partners are not liable for Act of partners.
Less Compliance level.
No exposure to personal assets of the partners except in case of fraud.
Less requirement as to maintenance of statutory records.
Less Government Intervention.
Easy to dissolve or wind-up.
Professionals can form Multi-disciplinary Professional LLP, which was not allowed earlier.
Audit requirement only in case of contributions exceeding Rs. 25 lakh or turnover exceeding Rs. 40 lakh.
Any act of the partner without the other partner, may bind the LLP.
Under some cases, liability may extend to personal assets of partners.
Cannot raise money from Public.
malipeddi jaggarao
(Expert) 17 October 2014
I differ with the opinion of the expert Mr.Anand Bali. there is no need to dissolve the private limited company and start a new LLP. There is a procedure for conversion of existing Limited company into LLP. The following is the check-list for conversion:
PROCESS OF CONVERSION OF COMPANY INTO LLP
A Private Company may convert into LLP in accordance with the procedure prescribed in the Third Schedule. Process as given below:
1. OBTAIN DIN:
Earlier there was Concept of DPIN, which has been abolished therefore. Now obtain DIN for those designated partners who don’t posses DIN already. (Process for obtaining Din given in my earlier Article).
2. BOARD MEETING:
Call meeting of board of Director.
Pass Resolution for Conversion of Company into LLP.
Pass Resolution to authorize any director to Apply for Name of LLP.
3. APPLICATION FOR NAME AVAIBILITY:
File e-form INC-1 with ROC.
Attachments: Board Resolution Board resolution passed by the Company approving the conversion into LLP shall be attached with the aforesaid form
4. Obtain name Approval Certificate from ROC.
5. DRAFTING OF LIMITED LIABILITY PARTNERSHIP AGREEMENT:
Contents of Agreement are:
Name of LLP
Name of Partners & Designated Partners
Form of contribution
Profit Sharing ratio
Rights & Duties of Partners
Proposed Business
Rules for governing the LLP
It is not necessary to have the LLP Agreement signed at the time of incorporation, as the details of the same needs to field in eform 3 within 30 days of incorporation but in order to avoid any dispute between the partners as to the terms & conditions of the agreement after the conversion into LLP.
6. FILLING OF INCORPORATION DOCUMENTS:
File E-Form- 2 with ROC along with following ATTACHMENTS:
Proof of Address of Registered office of LLP.
Subscription sheet signed by the promoters.
(Notice of Consent & Appointment of Designated Partners with their personal details)
Detail of LLP(s) and/ or company(s) in which partner/ designated partner is a director/ partner
7. FILLING OF APPLICATION FOR CONVERSION:
File E-FORM- 18 with ROC along with following ATTACHMENTS:
Statement of shareholders.
Incorporation Documents & Subscribers Statements in Form 2 filed electronically.
Statement of Assets and Liabilities of the company duly certified as true and correct by the auditor.
List of all the Secured creditors along with their consent to the conversion.
Approval of the governing council (In case of professional private limited companies)
NOC from Income Tax authorities and Copy of acknowledgement of latest income tax return.
Approval from any other body/authority as may be required.
Particulars of pending proceedings from any court/Tribunal etc.
After all formalities and filings been complied with by the applicants and approved by the Ministry, REGISTRAR OF LLP TO ISSUE A CERTIFICATE OF REGISTRATION in form no. 19 as to conversion of the LLP. The Certificate of Registration issued shall be the conclusive evidence of conversion of the LLP.
9. FILLING OF E-FORM-3:
This form provides information in respect to the LLP Agreement entered into between the partners.
ATTACHMENT: LLP Agreement
10. CERTIFICATE OF INCORPORATION AS LLP FORM ROC.
11. FILLING OF E-FORM-14: (INTIMATION TO ROC)
After Receiving Incorporation Certificate Limited liability partnership to file within 15 (fifteen) days of the date of registration, information to the concerned Registrar of Companies with which it was registered under the provisions of the Companies Act, 2013 (1 of 2013) about the conversion and of the particulars of the limited liability partnership in eForm 14 within 15 days of conversion into LLP.
ATTACHMENTS OF E-FORM 14
Copy of Certificate of Incorporation of LLP formed.
Copy of incorporation document submitted in Form 2.
AS REGARDS YOUR MAIN QUERY:
All movable and immovable properties of the company automatically vest in the LLP. No instrument of transfer is required to be executed and hence no stamp duty is required to be paid.
Anand Bali Adv.
(Expert) 17 October 2014
@ Mr Malipeddi Jagarao the Compant Law procedure also makes one existing company be desolved first and then convert it to the LLP please see the provisions again.
T. Kalaiselvan, Advocate
(Expert) 18 October 2014
In my view, expert Mr. Jagga Rao's opinions on the subject query holds good.
malipeddi jaggarao
(Expert) 18 October 2014
@ Expert Shri Anand Bali - Sir, I could not find the provisions in the Companies Act that it is mandatory to dissolve the company before forming an LLP. Kindly help me if there is any specific provision. I was believing that it can be converted into LLP by the procedure enumerated by me as above.
Anand Bali Adv.
(Expert) 18 October 2014
Experts it is a simultaneous dissolution and formation in the practical terms.like Partnership firms as, as soon any thing added or deleted in that, it looses the first entity and forms the other one. On paper all the partners are to be distributed their respective share and liability and then with afresh they have to start with the new one.
Anand Bali Adv.
(Expert) 21 October 2014
You are always welcome my friend Mr Kalaiselvan and Mr Malipeddi you too.
