Conversion of a Private Limited company into a LLP implies an exchange of the property, resources , interests , rights, benefits, liabilities, commitments and the endeavour of the privately owned business to the LLP as per the Third schedule.
Qualification for the conversion of a private limited company into a LLP:
- The Third Schedule of the LLP Act gives that an organization may apply to change over into a LLP as per this Schedule if and just if,
- a)there is no security enthusiasm for its advantages subsisting or in power at the season of use and
- b)the accomplices of the LLP to which it changes over include every one of the investors of the organization and nobody else.
- The Third schedule of the LLP Act provides that upon such conversion of the company, its shareholders , the LLP and the partners of that LLP shall be bound by the provisions of the Third Schedule that are applicable to them.
Procedure for conversion:
- The Third Schedule of the LLP Act provides that a company may apply to convert into an LLP by filing with the Registrar:
- a)a statement by all its shareholders in such form and manner to be accompanied by such fees as the Central Government may prescribe , containing the following particulars, namely:
- i)a statement by all its shareholders in such form and manner to be accompanied by such fees as the Central Government may prescribe, containing the following particulars, namely:
- i)the name and registration number of the company;
- ii)the date on which the company was incorporated;
- b)incorporation document and statement referred to in Section 11.
Incorporation document:
- To reiterate, the incorporation document shall, state the following information:
- a)the name of the LLP;
- b)State in which the registered office of the LLP is to be situated;
- c)the address of the registered office of the LLP;
- d)business to be carried on by the LLP;
- e)summary of partners/designated partners(i.e., number of partners, number of designated partners, number of designated partners resident in India);
- f)number of individuals as partners and their details;
- g)number of bodies corporate as partners and their details;
- h)total monetary value of contribution by partners in the LLP.
- Statement under Section 11:
- In accordance with Section 11(1)(c) of the LLP Act, there shall be filed along with the incorporation document, a statement in the prescribed form, to the effect that all the requirements of the LLP Act and the rules made there under have been compiled with, in respect of incorporation and matters precedent and incidental thereto. Such statement shall be made by the following persons:
- an advocate, or a Company Secretary or a Chartered Accountant or a cost accountant, who is engaged in the formation of the LLP, and
- anyone who has subscribed his name to the incorporation document.
Issue of the certificate of registration
- Section 58(1) of the LLP Act gives that the Registrar, on fulfilling that a firm , private company or an unlisted public company, as the case may be, has compiled with the arrangements of the Moment Plan, the Third Plan or the Fourth Plan, as the case may be, should, subject to the arrangements of the LLP Act and the rules made there under, register the reports submitted under such plan and issue a certificate of company registration in such frame as the Registrar may decide expressing that the LLP is, on and from the date indicated within the certificate, registered under the LLP Act. The third plan of the LLP Act gives that on getting the documents referred to, the Registrar might, subject to the provisions of the LLP Act and the rules made there under, register the documents.
- Sub-rule (1) of Rule 32 of the LLP Rules gives that the Registrar should, on conversion of a firm, private company or an unlisted public company into LLP, issue a certificate of registration under his seal in Frame 19.
- Sub rule (2) of Rule 39 of the LLP Rules gives that the Registrar should, on transformation of any private company into an LLP, issue a certificate of registration under his seal in Form 19.
Intimation by the LLP to the Registrar of Companies
- In terms of provision to Section 58(1) of the LLP Act, the LLP shall, within 15 days of the date of company registration, inform the concerned Registrar of Firms or Registrar of companies as the case may be, with which it was registered under the provisions of the Indian Partnership Act, 1932 or the Companies Act, 1956, as the case may be , about the conversion and of the particulars of the LLP in such form and manner as may be prescribed. In provision to the Third Schedule , the LLP shall , within 15 days of the date of registration, inform the concerned Registrar of Companies with which it was registered under the provisions of the Companies Act, 1956 about the conversion and of the particulars of the LLP in such form and manner as the Central Government may prescribe.
- Rule 33 of the LLP rules provides that for the purposes of the provisions to sub-section(1), where the firm, private company or unlisted public company has been converted into an LLP, an intimation of such conversion to the concerned Registrar of Firms or Registrar of Companies, as the case may be, shall be given in Form 14 within 15 days of the date of registration of the LLP.
- Rule 39 of the LLP rules state that the LLP shall inform the concerned Registrar of Companies about the conversion of a private company into an LLP.
Effect of conversion:
- Section 58(2) of the LLP Act provides that upon such conversion, the partners of the firm, the shareholders of a private limited company or unlisted public company , as the case may be, the LLP to which such firm or company has converted, and the partners of the LLP shall be bound by the provisions of the 2nd Schedule, as the case may be, applicable to them.
- Section 58(3) of the LLP Act provides that upon such conversion, on and from the date of certificate of registration, the effects of the conversion shall be such as specified in the 2nd schedule, the 3rd schedule or the 4th schedule , as the case may be.
Registrar may refuse to register:
- The third schedule of the LLP Act, nothing in this schedule shall be construed as to require the Registrar to register any LLP if he is not satisfied with the particulars or other information furnished under the provisions of the LLP Act.
- An appeal may be made before the Tribunal in case of refusal of registration by the Registrar. However, until the Tribunal is constituted under the Companies Act, 1956, the appeal under this sub-paragraph may be made to the Company Law Board.
- Sub-rule(2) of Rule 32 of the LLP Rules provides that in the event the Registrar has refused the registration, the applicant firm or private company or unlisted public company, as the case may be, may apply to the Tribunal within 60 days from the date of receipt of such intimation of refusal. However, until the Tribunal is constituted under the Companies Act, 1956, the application under sub rule (2) of Rule 32 may be made to the Company Law Board.
Effect of registration:
- The LLP Act provides that not withstanding anything contained in any other law for the time being in force, on and from the date of company registration specified in the certificate of registration issued under the second schedule, the third schedule or the fourth schedule as the case may be:
- a)there shall be an LLP by the name specified in the certificate of registration registered under this Act;
- b)all tangible and intangible properties vested in the firm or the company , as the case may be, all the assets, interests , rights, privileges, liabilities, obligations relating to the firm or the company , as the case may be transferred to and shall vest in the LLP without further assurance, act or deed; and
- c)the firm or the company, as the case may be, shall be deemed to be dissolved or removed from the records of the Registrar of Firms or Registrar of Companies as the case may be,
- The third schedule of the LLP rules that on and from the date of registration specified in the certificate of registration issued:
- a)there shall be an LLP by the name specified in the certificate of registration registered under the LLP Act;
- b) all tangible and intangible properties vested in the firm or the company , as the case may be, all the assets, interests , rights, privileges, liabilities, obligations relating to the company shall be transferred to and shall vest in the LLP without further assurance, act or deed; and
- c)The company , shall be deemed to be dissolved or removed from the records of the Registrar of Companies.
Registration in relation to the property:
- The Third Schedule of the LLP Act provides that if any property, to which paragraph(6) applies , is registered with any authority , the LLP shall, as soon as practicable , after the date of registration, shall take all necessary steps as required by the relevant authority to notify the authority of the conversion and of the particulars of LLP in such form and manner as the authority may determine.
Pending procedures:
- The Third Schedule of the LLP Act gives that all procedures by or against the company which are pending under the before any court, Tribunal or authority on the date of registration might be proceeded, finished and upheld by or against the LLP. At the end of the day, all procedures by or against the recent company will stand vested into the LLP, as it seems to be.
Continuance of conviction, ruling , order or judgement:
- The Third Schedule of the LLP Act provides that any conviction , ruling, order or judgement of any Court, Tribunal or other authority in favour of or against the company may be enforced by or against the LLP.
Existing agreements:
- The Third Schedule of the LLP Act provides that every agreement to which the company was a party immediately before the date of registration , whether or not of such nature that the rights and liabilities there under could be assigned, shall have effect as from that date as if:
- a)the LLP were a party to such an agreement instead of the company; and
- b)for any reference to the company, there were submitted in respect of anything to be done on or after the date of registration a reference to the LLP.
Existing contracts:
- The Third Schedule of the LLP Act provides that all deeds, contracts, schemes, bonds, agreements, applications, instruments and arrangements subsisting immediately before the date of registration relating to the company or to which the company is a party shall continue in force on and after the date as if they relate to the LLP and shall be enforceable by or against the LLP as if the LLP were named therein or where a party thereto instead of the company.
Continuation of employment
- Third Schedule of the LLP Act gives that each agreement of employment to which passage 10 applies will proceed in power on and after the date of registration as though the LLP were the employer there under rather than the company.
Existing appointment , authority or power
- Third Schedule of the LLP Act gives that each appointment of the company in any job or capacity which is in power quickly before the date of company registration will produce results and work from that date as though the LLP were selected. The Act likewise gives that any authority or power gave on the company which is in power instantly before the date of registration will produce results and work from that date as though it were given on the LLP.
- The provisions of the rules shall apply to any approval, permit or license issued to the company under any other Act which is in force immediately before the date of registration of the LLP, subject to the provisions of such other Act under which such approval, permit or license has been issued.
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