Whether a Firm or LLP can be converted in to Company : Complete Procedure

In my previous article(Click Here to Read), I have clarified the possibility whether LLP can be converted in to Company and now I am sharing complete procedure as committed:

Procedure for Conversion of LLP Into Company

We need to ensure following things, before filing application:

• That secured creditors have given their consent for such conversion;
• A notice in newspaper about such conversion, one in English and in vernacular language seeking objections must be published;
• There are minimum seven or more members in the existing LLP for converting the LLP in to a Company.
• A general meeting must be held where majority of partners have given their consent for such conversion.

DIN & Digital Signature Certificate:

In case all seven members, who are proposed Directors of the Company after conversion, not holding any DIN then DIN and Digital Signature Certificate for all the proposed Directors of the Company must be obtained. For obtaining DIN an application in Form No. DIR – 3 should be filed on MCA Portal. DIN application is processed and approved by the Central Government through the office of Regional Director, Ministry of Corporate Affairs. Form No. DIR – 3 must be accompanied by self attested Identity Proof and Address Proof and one recent passport size color photograph of the Applicant. All the documents must be attested by a practicing professional viz. Practicing Cost & Management Accountant, practicing Company Secretary or practicing Chartered Accountant.

Name Approval:

Name approval has to be obtained from the Registrar of Companies [“RoC”] by submitting an application in eForm INC 1. For this you need to decide various items, which are mentioned in Form INC 1. The name once approved by the authority is valid for 60 days. The Subscriber to the Memorandum and Articles of Association shall be the applicant for the availability of name application.

Preparation and Filing of Form No. URC – 1:

After obtaining name approval from the Registrar of Companies, applicant shall prepare and file the Form No. URC – 1 along with the following documents:

• A list showing the names, addresses, and occupations of all persons named therein as members with details of shares held by them respectively, showing separately shares allotted for consideration in case and for consideration other than cash along with the source of consideration and distinguishing, in cases where shares are numbered, each share by its number, who on a day, not being more than six clear days before the day of filing this application, were partners of the Limited Liability Partnership;
• A list showing the particulars of persons proposed as the first directors of the Company, their names, including surnames or family names, the DIN, passport number (if any) with expiry date, residential addresses and their interests in other firms or bodies corporate along with their consent to act as Director of the Company;
• An affidavit from each of the persons proposed as the first directors, that he is not disqualified to be a director under section 164(1) and that all the documents filed with the Registrar for registration of the Company contain information that is correct and complete and true to be best of his knowledge and belief;
• A list containing the names and addresses of the Partners of the Limited Liability Partnerships;
• A Copy of LLP Agreement and Certificate of Registration duty verified by at least two designated partners of LLP;
• A statement specifying the following particulars; a) the nominal share capital of the company and the number of shares into which it is divided; b) the number of shares taken and the amount paid on each share; c) the name of the company, with the addition of the word ‘Limited’ or ‘Private Limited’ as the case may require, as the last word or words thereof;
• Written consent or No Objection Certificate from all the secured creditors of the applicant;
• Written consent from the majority of members whether present in person or by proxy at a general meeting agreeing for registration under section 366 of the Companies Act, 2013;
• An affidavit duly notarised, from all the members or partners providing that in the event of registration as a company under Part I Chapter XXI of the Companies Act, 2013, necessary documents or papers shall be submitted to the registering or other authority with which the company was earlier registered, for this dissolution as Limited Liability Partnership;
• Statement of accounts of the company, prepared not later than 6 days preceding the date of application duly certified by auditor, if applicable;
• Declaration of two or more directors verifying the particulars of all members/partners;
• Copy of Newspaper advertisement
• Certificate from a Company Secretary in Practice/Cost Accountant in Practice/Chartered Accountant in Practice certifying the compliance with all the provisions of Stamp Act, to the extent applicable;
• No objection certificate from the concerned Registrar of LLP.

Filing of Incorporation Forms:

The following forms are required to be filed with the RoC:

• eForm INC 7 (declaration of compliance with the requirements of the Act on application for registration of a company);
• eForm INC 22 (notice of situation of registered office);
• eForm DIR 12 (appointment of directors of the company); and
• a Power of Attorney to be executed by subscribers and proposed directors (authorisation by the promoters of the company to a person/s to carry out appropriate changes as suggested by the RoC in any of the incorporation papers that have been filed).

Certificate of Incorporation:

Once all clarifications are provided, the Certificate of Incorporation is issued by the RoC and the company is deemed to be incorporated from the date of the Certificate of Incorporation.

After obtaining the registration under Section 367 of the Companies Act, 2013, intimation to this effect shall be given, within fifteen days of such registration to the concerned Registrar (LLP) under which it was originally registered, along with necessary documents or papers for its dissolution as Limited Liability Partnership.

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.