Conversion of LLP into Private Limited Company- Process & Documents

Updated on July 19, 2025 02:53:11 PM

There are companies in India that begin as Limited Liability Partnerships (LLPs) but later on plan to convert into a private limited company due to the benefits of establishing a private limited company. Read more about the process of conversion of LLP into Pvt Ltd Company in detail.

The provisions related to conversion of LLP into Private Limited company are mentioned under Section 366 of the Companies Act of 2013 and the Company (Authorised to Register) Rules of 2014, which states that such a conversion is possible as per the legal procedures.

LLP is a good option for a small or medium size business that has a turnover less than 40 lakhs annually. LLP companies that satisfy this condition do not have to go for financial audit every year. However, this is not the case with Private company registration . A private limited firm has to opt for financial account audits every year, regardless of the turnover and capital size.

In India, the conversion of a Limited Liability Partnership (LLP) to a Private Limited Company is governed by the Companies Act, 2013, and the Limited Liability Partnership Act, 2008. The conversion can only take place if the following conditions are met:

1. The LLP must have at least two designated partners.
2. All designated partners of the LLP must give their consent for the conversion into Pvt Ltd.
3. The LLP must have filed all the necessary statutory documents, including annual returns and financial statements, up to the date of the conversion.
4. The LLP must not have any pending regulatory or statutory filings or any unresolved disputes or legal proceedings.
5. The LLP must not have any outstanding debts or liabilities that may hinder the conversion process.
6. The LLP must have obtained all the necessary approvals and licenses for its business operations.
7. The proposed name of the new Private Limited Company must not be similar to the name of any existing company or LLP.
8. The conversion must be in compliance with all applicable laws and regulations mentioned under the Companies Act, 2013.

It is important to note that the conversion process can be complex and time-consuming, and entrepreneurs may require professional assistance to ensure compliance with all the legal requirements. By seeking professional guidance from Professional Utilities and ensuring that all the conditions for conversion are met, entrepreneurs can successfully convert their LLP to a Private Limited Company and enjoy the benefits of this business structure.

Given below are the possible reasons for conversion of an LLP into a Private Limited Company:

1. An LLP converts into a Private Limited company mainly for growth and extension of the existing business.
2. An LLP company can attract only a few investment opportunities, so to extend the funding and investment opportunities like foreign funding and equity funding they convert to private limited company
3. LLP is converted into Private Limited to issue equity share capital.
4. LLP conversion into Private Limited also helps in avoiding capital tax gains.
5. The conversion also benefits in carrying forward unabsorbed losses and depreciation of the last year.
6. An LLP can be converted into Private limited with the same brand name, therefore brand name and goodwill can be used to grow further.

Converting a Limited Liability Partnership (LLP) to a Private Limited Company in India can provide several benefits to entrepreneurs, including:

Better access to funding

Private Limited Companies have better access to funding options such as equity and debt financing. As a result, conversion to a Private Limited Company can help entrepreneurs raise capital for business expansion or other purposes.

Brand recognition

Private Limited Companies are considered more credible and reliable than LLPs. As a result, conversion to a Private Limited Company can help enhance the brand recognition of the business and increase its market reputation.

Transferability of ownership

Private Limited Companies have the ability to issue shares, which allows for the transfer of ownership. This can be useful if entrepreneurs want to sell their stake in the business or bring in new investors.

Limited liability protection

Like LLPs, Private Limited Companies also offer limited liability protection to their shareholders. This means that the personal assets of shareholders are not at risk in case the business incurs losses or faces legal liabilities.

Tax benefits

Private Limited Companies enjoy several tax benefits such as lower tax rates on profits, the ability to carry forward losses for future years, and deductions for expenses incurred for business purposes. These tax benefits can help reduce the overall tax liability of the business.

Greater scope of expansion

Private Limited Companies have a greater scope of expansion compared to LLPs. They can have more than 200 shareholders, whereas LLPs are restricted to a maximum of 200 partners. Additionally, Private Limited Companies can operate in multiple states or even outside India, which can provide more business opportunities for entrepreneurs.

Overall, the conversion of an LLP to a Private Limited Company can provide entrepreneurs with several benefits that can help them grow and expand their business. However, it is important to carefully consider all the factors involved and seek professional guidance to ensure a smooth and successful conversion process.

The list of documents required for conversion of LLP into Private Limited are as follows:

• Identity Proof
• Address Proof
• Passport size photographs of the applicant
• Copy of latest financial returns filed by the LLP.
• NOC from other partners and Registrar of Companies.

Documents required to file Form URC-1 are:

• Complete list of members with their personal details such as name, address, share holding.
• List of Directors with their personal details such as name, address, DIN.
• List of partners of the Limited Liability Partnership along with their personal details such as name, address etc.
• A Copy of limited Liability Partnership agreement and certificate of registration.
• Details related to the shareholders and value of shares that are held by all the shareholders in the company.
• NOC from all the creditors of LLP.
• Copy of newspaper in which the conversion related information is published.