Whether a Firm or LLP can be converted in to Company?

It is one of the most frequently asked question in Corporates and Professionals. Earlier there was no prescribed rules and provisions to convert any firm or LLP in to a company.

Although after introduction of the Companies Act, 2013, Sec 366 of the Companies Act, 2013 includes LLP also in Companies capable of being registered. But there were no prescribed rules to convert Firm or LLP into Company and there was serious requirement of notification and amendment in The Companies (Authorised to Register) Rules, 2016, so that way to convert any Firm or LLP into Company, can be opened.

Thus, Ministry of Corporate Affairs, in exercise of power u/s 469(1) and 469(2) read with Sec 366, had amended the rules and introduced "The Companies (Authorised to Register) Amendment Rules, 2016" w.e.f 31st May 2016. After notification of these rules procedure to convert a Firm or LLP into a Company was also introduced, 

Any firm or LLP, which requires conversion into a Company, shall have to file following forms with the Registrar of Companies:

1. Apply name in Form INC-1.

2. File URC-1 with the following attachments.

                  a)      Particulars of members/partners along with the details of shares held by them

b)      Declaration of two or more directors verifying the particulars of all members/partners;

c)      Affidavit from all the members/partners for dissolution of the entity;

d)     Copy of the instrument constituting or regulating the entity

e)      Copy of certificate of registration of the entity, if any;

f)       Copy of Newspaper advertisement

g)      Certificate from a CA/CS/CWA certifying the compliance with all the provisions of Stamp Act, to the extent applicable

h)      Consent of majority of members;

i)        Consent of at least three-fourth of members agreeing for registration under this part;

j)        No objection certificate from the concerned Registrar of Firms or Registrar of Companies(LLP);

k)      Statement of accounts of the company, prepared not later than 30 days preceding the date of application duly certified by auditor; if applicable

l)        Copy of the resolution declaring the amount of guarantee

m)    Optional Attachment(s)

Detailed procedure to convert any Firm or LLP into company and format of attachments required shall be shared in my upcoming articles, suggestions are always invited.

Disclaimer: Above article is based on the author’s personal views and based on his knowledge and understanding. Author shall not be responsible for any damage or loss.