Conversion of Company ⇄ LLP ⇄ Partnership – Seamless & Compliant Business Transformation in India
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Overview of Conversion of Company / LLP / Partnership
In India, businesses evolve — and so must their legal structure. Whether you want to convert a Private Limited Company into an LLP, transform a Partnership Firm into a Limited Liability Partnership (LLP), or vice-versa, the process involves statutory compliance, documentation, government filings, and legal checks. Every business form has its own legal identity, tax implications, ownership rights, and liability norms. Properly navigating a conversion ensures:
Legal validity and protection
Compliance with MCA (Ministry of Corporate Affairs) laws
Tax neutrality where applicable
Seamless transition of assets and liabilities
At TaxHit Consultancy, we manage every step of the conversion process — from initial eligibility assessment to government approvals and post-conversion compliance — so you can focus on growth without regulatory stress.
What Is Business Conversion?
Business Conversion refers to changing the legal structure of your entity from one form of organisation to another as recognised under Indian law. The most common transitions include:
Private Limited Company to Limited Liability Partnership (LLP)
Partnership Firm to LLP
LLP to Private Company (or other structures)
Each conversion results in a new legal entity while ensuring continuity of business operations, transfer of assets, and rights obligations as prescribed by law.
Why Convert Your Business Structure?
Key Reasons to Consider Conversion
Limited Liability Benefits
Transition to LLP protects personal assets of partners beyond their contribution.
Simplified Compliance
LLPs often have smoother annual compliance compared to companies.
Tax Advantages
Subject to conditions, conversion may be tax neutral under Section 47(xiiib) of the Income Tax Act.
Ease of Business Expansion
Converting structure may align better with funding or business model changes.
Eligibility – Who Can Convert?
A. Company to LLP (Private Limited / Unlisted Public)
To convert a company to an LLP:
All shareholders must agree and become partners in the LLP.
The company must not be a Section 8 or guarantee company (i.e., no share capital).
There should be no undischarged charges on assets at the time of application.
All statutory filings (ROC returns) should be up-to-date.
At least two designated partners must be appointed with valid DPIN/DIN.
B. Partnership Firm to LLP
Conversion from a Partnership Firm to LLP is governed under Section 55 of the LLP Act, 2008 and Schedule II.
Eligibility conditions include:
All partners of the firm must consent to and become designated partners in the LLP.
The firm must be registered under the Indian Partnership Act, 1932 (for registered firms) — although even unregistered firms can convert if compliance criteria are met.
All partners must have valid Digital Signature Certificates (DSC) and at least 2 must have DPIN.
All secured creditors must provide consent prior to conversion.
Documents Required for Conversion
Company to LLP
- Board resolution approving conversion
- Shareholder consent letters
- Latest ROC annual return and financial statements
- List and details of all shareholders
- Identity and address proofs of proposed LLP partners
- No-objection certificates (NOCs) from secured creditors
- Statement of assets and liabilities certified by a CA
- Any pending statutory forms list
Partnership Firm to LLP
- Partnership deed and registration certificate (if registered)
- DSC and DPIN of all partners
- Statement of assets and liabilities of the firm
- Consent of all partners for conversion
- NOC from secured creditors
- Proof of registered office and partner address proofs
Step-by-Step Process for Conversion
1. Company to LLP Conversion
Step 1: Board & Shareholder Approvals
Conduct a Board meeting and obtain a special resolution for conversion. All shareholders must consent to the transition.
Step 2: Name Reservation
Apply for name reservation with MCA under the RUN-LLP process.
Step 3: Prepare Conversion Docs
Get required documentation and draft a proposed LLP Agreement.
Step 4: File Key Forms
FiLLiP – Application for LLP incorporation
Form 18 / Form 17 – Application for conversion with details of assets, liabilities, partners
Step 5: Issuance of Certificate of Incorporation
Once approved, MCA issues the LLP certificate, confirming the new structure.
Step 6: Post-Conversion Filings
File LLP Agreement (Form LLP-3)
Apply for PAN, TAN, GST (if required)
2. Partnership Firm to LLP Conversion
Step 1: Obtain DSC & DPIN
All partners must get their DSC and DPIN before filing any online MCA forms.
Step 2: Name Approval
Reserve the LLP’s name through the MCA RUN-LLP facility.
Step 3: File Forms for Conversion
Form FiLLiP – LLP incorporation
Form 17 – Application for conversion with all attachments (consents, statements of assets & liabilities, tax returns, etc.)
Step 4: Certificate of Incorporation
After verification, the ROC issues the LLP incorporation certificate.
Step 5: LLP Agreement & Post-Conversion Compliance
File LLP Agreement (Form LLP-3) within 30 days
Update tax registrations (PAN/TAN/GST)
Inform Registrar of Firms (via Form 14)
Why Choose TaxHit Consultancy?
Professional Expertise in MCA & LLP conversions
End-to-End Support from documentation to ROC filing
Compliance Assurance with legal standards
Transparent Pricing & Timelines
Tax & Legal Implications
Tax Neutrality on Conversion
Under Section 47(xiiib) of the Income Tax Act, conversion of a company into an LLP may be tax-neutral if:
- All assets and liabilities transfer to the LLP
- Partners retain equivalent capital contribution and profit share
- No other benefit is received by shareholders
- Profit share conditions are maintained for 5 years
- Turnover and asset value criteria (where relevant) are met
Benefits After Conversion
LLP Benefits
- Limited liability for partners
- Separate legal existence
- Fewer annual compliance requirements versus private companies
- Flexible internal structure governed by an LLP Agreement
- Enhanced ease of doing business
Frequently Asked Questions (FAQs)
What’s the difference between LLP and Partnership?
LLPs provide limited liability and separate legal identity — unlike traditional partnership firms that have unlimited liability.
Can a company with charges on assets be converted?
Yes, but all secured creditors must provide NOC before filing.
Is conversion taxed?
Conversion may be tax-neutral if conditions under Section 47(xiiib) are met.
What happens to existing contracts after conversion?
Contracts generally continue in the name of the new LLP, though some may require re-execution.
Do I need a resident designated partner in LLP?
Yes, at least one partner must be resident in India.