Before initiating the application, the company must meet the following baseline conditions:
- Identical Shareholding: All shareholders of the company must become partners of the LLP, and no outsider can be added during the process.
- No Open Charges: There must be no subsisting security interest or open charges on the company's assets.
- Up-to-Date Filings: The company must have filed its latest annual returns (MGT-7/7A) and financial statements (AOC-4).
- No Pending Prosecutions: No legal or penal proceedings should be active against the company under the Companies Act.
- Minimum Partners: At least two designated partners are required, with one being an Indian resident.
Step-by-Step Conversion Procedure
Step 1: Board Meeting & Shareholder Approval
- Convene a Board Meeting to pass a resolution approving the conversion.
- Authorise a director to execute the process and file forms.
- Conduct an Extraordinary General Meeting (EGM) to pass a Special Resolution, which must be filed via Form MGT-14 with the ROC within 30 days.
Step 2: Name Reservation
- File the RUN-LLP (Reserve Unique Name) form on the MCA Portal to reserve the proposed name.
- The name must ideally match the original company name, substituting "Private Limited" with "LLP".
Step 3: Filing the Conversion & Incorporation Application
You must concurrently file the primary application through the integrated MCA V3 portal portal:
- Form FiLLiP: The standard incorporation form detailing the partners, registered office, and contribution.
- Form 18: The specific application for converting a company into an LLP.
Mandatory Attachments for Form 18 & FiLLiP:
- Unanimous written consent statement from all shareholders.
- Statement of Assets and Liabilities certified by an independent auditor (not older than 15 days).
- Copy of the latest Income Tax Return (ITR) acknowledgment.
- No Objection Certificate (NOC) from all secured creditors.
- Proof of registered office address alongside an NOC from the owner.
Step 4: Certificate of Registration
- Upon successful verification, the Registrar of Companies (ROC) issues a Certificate of Registration.
- This officially dissolves the company and removes it from the MCA register. All assets and liabilities vest into the LLP automatically
Step 5: Execute and File the LLP Agreement
Draft the LLP Agreement defining the profit-sharing ratios, rights, and duties of the partners.
Execute it on stamp paper and file Form 3 with the ROC within 30 days of incorporation.
Step 6: Post-Conversion Intimation (Form 14)
- File Form 14 with the ROC within 15 days of conversion to formally notify the authorities under the Companies Act.
Tax Neutrality & Capital Gains Implications
Under Section 47(xiiib) of the Income Tax Act, the transfer of assets from a company to an LLP is exempt from capital gains tax only if these strict criteria are met cumulatively:
| Exemption Condition |
Upper Threshold / Requirement |
| Asset Value |
Total book value of assets must not exceed ₹5 Crores in any of the 3 preceding years. |
| Annual Turnover |
Total turnover/gross receipts must not exceed ₹60 Lakhs in any of the 3 preceding years. |
| Shareholding Ratio |
Shareholder profit-sharing and capital contribution ratios must match their old shareholding exactly. |
| Continuity of Shares |
The original shareholders must cumulatively maintain at least 50% profit sharing for 5 years post-conversion. |
| Partner Payouts |
No direct or indirect payments can be made to partners out of accumulated company profits for 3 years. |
Note: If any of these conditions are violated, the capital gains exemption is withdrawn, and the transaction becomes taxable for the successor LLP.
Critical Post-Conversion Steps
Once the LLP is incorporated, you must update statutory records immediately:
- Apply for New PAN/TAN: The old corporate PAN becomes invalid, and a new one must be generated for the LLP.
- Update GST & Bank Accounts: Update your corporate bank accounts and transition your GST registration to reflect the new entity name and constitution.
- Re-apply for Licenses: Operational licenses (e.g., FSSAI, Import Export Code, MSME) do not transfer automatically and require fresh applications or amendments