Conversion : LLP to Private Limited Company

Introduction

Many businesses in India that initially began as Limited Liability Partnerships (LLPs) are increasingly choosing to convert into Private Limited Companies to unlock greater growth potential, attract equity investment, and enhance their market reputation. This conversion is governed by Section 366 of the Companies Act, 2013, along with the Companies (Authorised to Register) Rules, 2014.

To be eligible, the LLP must meet certain requirements, including a minimum of seven partners, unanimous consent from all partners, publication of public notices in both local and national newspapers, and securing a No Objection Certificate (NOC) from the Registrar of Companies (RoC).

While the process may appear complex, IndiaFilings streamlines every step of the transition, ensuring a smooth and compliant conversion—allowing you to focus on scaling your business with confidence.

What is an LLP?

A Limited Liability Partnership (LLP) is a hybrid business structure introduced in India in 2008, combining the benefits of traditional partnerships and private companies. LLPs enjoy features such as:

Limited liability protection for partners
Separate legal identity
Perpetual succession
Lower compliance requirements

Despite these advantages, LLPs face limitations that often prompt businesses to convert to a Private Limited Company, particularly for scaling operations and attracting investment.

Challenges of LLPs

Higher Tax Rate: LLPs are taxed at a flat rate of 30%, unlike Private Limited Companies which benefit from a reduced corporate tax rate of 22%–25%.
Limited Fundraising Capabilities: LLPs cannot issue shares, restricting access to equity funding from investors or venture capitalists.

Recognizing these drawbacks, many businesses choose to convert their LLP into a Private Limited Company to access broader growth and investment opportunities, while retaining existing goodwill and operational continuity.

Legal Framework for LLP to Private Limited Company Conversion

The process is governed by:

Section 366 of the Companies Act, 2013
The Companies (Authorised to Register) Rules, 2014

To ensure a valid conversion, the LLP must fulfill prescribed eligibility criteria and follow a defined legal process.

Benefits of Converting LLP to Private Limited Company

Greater Growth Opportunities
A company structure better supports expansion and large-scale operations.
Enhanced Capital Raising Options
Ability to raise funds via equity shares and debentures; issue ESOPs.
Favorable Taxation
Access to a lower corporate tax rate (22%–25%) and tax exemptions on conversion.
Public Listing Potential
Scope to convert into a public limited company in the future.
Preservation of Brand Value
Retains existing business name and goodwill post-conversion.
Increased Foreign Investment Appeal
Fewer compliance hurdles for attracting FDI.

Eligibility Criteria for Conversion

To convert an LLP into a Private Limited Company, the following conditions must be met:

Minimum Partners:
At least two partners in the LLP. After conversion:
- Minimum two shareholders
- Minimum two directors (one resident in India)
Unanimous Consent:
All LLP partners must approve the conversion.
No Unresolved Liabilities:
If liabilities exist, written NOC from all creditors is mandatory.
Up-to-date Financial Compliance:
Latest audited financial statements required, prepared no more than six days prior to RoC submission.
Approved Company Name:
Name must be reserved and approved by the RoC as per Companies Act norms

Key Legal Provisions for Conversion

1. Transfer of Property (Section 368)

All assets, liabilities, and rights of the LLP vest in the Private Limited Company upon registration.

2. Retention of Liabilities (Section 369)

The converted company remains accountable for all pre-conversion obligations.

3. Legal Continuity (Section 370)

Ongoing legal proceedings involving the LLP can continue unaffected post-conversion.

4. Name Reservation

Submit an e-Form for name approval, ensuring compliance with naming guidelines.

Pre-Conversion Obligations

Consent from Secured Creditors

NOCs or written consent from all secured creditors are mandatory.

Public Notification

Publish a notice of intent in Form URC-2
In one local (vernacular) and one English newspaper
Invite public objections within 21 days

Submission of Notices

Attach copies of published notices and LLP Registrar service proofs to Form URC-1.

Documentation Required for Conversion

For Company Limited by Shares

List of Partners & Share Details
- Names, addresses, shareholding (cash/non-cash), and consideration source
- Must be updated within six days of filing
List of First Directors
- Names, DINs, passport details (if applicable), addresses, and declarations
NOC from Creditors and Latest ITR
- Consent from charge holders
- Copy of the latest income tax return

For Company Limited by Guarantee

List of Members & Directors
- Names, addresses, DINs, and declarations
- Proof of membership and director consent
Resolution for Guarantee Amount
Additional Compliance Documents
- NOC from creditors
- Latest ITR copy

Verification and Filing Requirements

All lists and declarations must be verified and signed by at least two proposed directors
Ensure Form URC-1 includes all mandatory annexures based on the new company type.

Additional Obligations Under Section 374

Statement of Accounts

Prepared no more than 15 days before application
Must be audited and certified

Compliance Declaration

Confirm all required filings under the LLP Act have been completed

Statement of Legal Proceedings

Disclose all pending litigation or regulatory matters.

Step-by-Step Process for Converting an LLP into a Private Limited Company

The conversion of a Limited Liability Partnership (LLP) into a Private Limited Company is governed by Section 366 of the Companies Act, 2013, and the Companies (Authorised to Register) Rules, 2014. Below is a detailed step-by-step guide to help you navigate the process efficiently:

1. Name Reservation

Submit the RUN (Reserve Unique Name) form on the MCA portal to apply for the proposed name of the Private Limited Company.
Ensure the name complies with the naming guidelines outlined in the Companies Act, 2013.
Once approved, the reserved name is valid for 60 days.

2. Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN)

Acquire DSC for all proposed directors of the new company.
Apply for DIN through Form DIR-3 (if the directors do not already have one).

3. Publish Public Notice

Publish a notice of intention to convert the LLP into a Private Limited Company using Form URC-2.
The notice must be published in:
- One vernacular newspaper (local language), and
- One English newspaper circulating in the district where the LLP is registered.
Allow 21 clear days for the public to raise any objections.

4. File Form URC-1 with Required Documents

Submit Form URC-1 to the Registrar of Companies (RoC) along with all mandatory supporting documents, including:
- List of partners/members
- Details of directors
- NOC from creditors
- Latest financial statements
- Income tax return
- Proof of newspaper publication

5. Draft and Submit MoA and AoA

Prepare the Memorandum of Association (MoA) and Articles of Association (AoA) of the proposed company.
These documents define the company’s objectives and governance structure.
Submit them to the RoC, ensuring alignment with the approved name and company structure.

6. Address Public or Regulatory Objections

The RoC will assess the application and any objections received during the notice period.
Provide necessary clarifications or documentation to resolve any raised objections or concerns.

7. Issuance of Certificate of Incorporation

Upon satisfaction of all compliance requirements and payment of applicable fees, the RoC will issue a Certificate of Incorporation (Form INC-11).
The LLP is thereby dissolved under the Limited Liability Partnership Act, 2008, and the business officially operates as a Private Limited Compan.

Dissolution of LLP Upon Conversion to a Private Limited Company

In accordance with Section 374 of the Companies Act, 2013, and Rule 4 of the Companies (Authorised to Register) Rules, 2014, once an LLP is successfully registered as a Private Limited Company, it is automatically deemed dissolved under the provisions of the Limited Liability Partnership Act, 2008.
No separate action or formal procedure is required to effectuate this dissolution—the conversion itself serves as the final step in terminating the LLP’s legal existence.

About the Author

Rohit

Rohit is an experienced legal writer who excels at translating complex legal concepts into clear, actionable advice. His writing equips entrepreneurs with the legal knowledge they need to confidently start, manage, and scale their businesses.

August 6, 2025