How to Convert OPC into LLP?

Many business entrepreneurs and founders begin with an OPC and later might convert One Person Company OPC to Limited Liability Partnership LLP, to get more flexibility, better management structures, increased credibility, etc.

The process of Conversion of OPC into LLP is a slightly complex procedure and requires considering legality and regulatory issues. In this comprehensive guide, we will explore the steps involved in converting OPC into LLP and provide valuable insights to help you navigate through the conversion process smoothly or take legal advice from Professional Utilities.

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What is an OPC?

A One Person Company (OPC), is a business form in which a single individual owns a company. Once a company is incorporated as an OPC, it is treated as a separate entity, enjoying limited liability benefits as well as that of a private limited company.

What is an LLP?

LLP basically stands for a Limited Liability Partnership. It is a partnership firm wherein the liability of its partners is limited to the extent of their contribution to the business. An LLP amalgamates the advantages of both partnership and company, thereby offering limited liability protection to partners while also guaranteeing flexibility in its management.

Advantages of Converting OPC into LLP

Flexibility in Management: Flexibility in the management of the company is also more in an LLP than it is in an OPC, as in an OPC the entire control is with the individual.
Limited Liability: With the conversion to an LLP, the risk of the partners’ liabilities is restricted to their individual contributions. This offers personal protection to the partners from the risks involved in the running of the business.
Easy Transfer of Ownership: LLPs provide ease in transferring the ownership of the business without affecting the existence and operation of the business. It therefore becomes easy to bring in new partners or transfer the ownership to the next generation.
Better Credibility: An LLP firm is also believed to have better credibility with different stakeholders such as suppliers, customers, or even the financial institutions. All this may help the firm tap out more business opportunities.

Eligibility Criteria for Conversion

At least two years must have elapsed since it was incorporated as an OPC.
The turnover of the OPC should not exceed the limit as prescribed under the Companies Act of 2013.
The OPC should not be in default to filing annual returns and financial statements.
All the members as well as shareholders of the OPC must give their consent to the conversion.

Step-by-Step Process for Conversion of OPC into LLP

Consent from Members: Consent should be taken from all the members of OPC with respect to the conversion of OPC into LLP.
File Conversion Application (Form 17): Taking consent from all members, it is required to file the application for conversion by submitting Form 17 to the ROC.
Obtain DSC and DIN: All the proposed partners of the LLP need to obtain a DIN and a DSC from the MCA.
Reservation of Name (Form-3): Select a distinctive name for your LLP, then file an application for name reservation with the Registrar of Companies (ROC).
Drafting of LLP Agreement: This entails the drafting of an agreement where the rights and responsibilities of the partners, sharing of profit among the partners, and other relevant matters will be spelt out before filing the documents with the ROC.
Obtaining Certificate of Incorporation: On receipt of all documents, ROC grants the Certificate of Incorporation to convert the OPC to an LLP

Documents Required for Conversion

Digital Signature Certificate (DSC)
Director Identification Number (DIN)
No Objection Certificate (NOC)
Consent of Partners
The consent
Copy of LLP Agreement
Proof of Address Proof of Identity

Conclusion

The conversion of OPC into LLP can be a strategic move by the entrepreneurs to convert the fundamental constitution of the firm and avail the benefit of limited liability with higher management flexibility. By adhering to all the steps defined for the conversion of an OPC into an LLP, it can be easily done for better growth and management opportunities.

For further assistance in conversion of OPC to LLP, one can contact the consultants at Professional Utilities.

FAQs on Conversion of OPC into LLP

How long does it take to convert an OPC into an LLP?

The process of conversion generally takes about 30 to 45 days, depending on several factors such as the availability of documents and the efficiency of the concerned authorities.