Schedule 3 The Limited Liability Partnership Act, 2008

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Conversion From Private Company Into Limited Liability Partnership

Schedule 3 of LLP Act, 2008 provides for Conversion from Private Company into Limited Liability Partnership. Below are the simplified explanation of the provisions of Schedule 3 of LLP Act, 2008

  1. Definitions

    • Company: A private company as defined in the Companies Act, 1956.
    • Convert: Transferring everything from a private company to an LLP according to these rules.

  2. Eligibility for Conversion

    • A company can become an LLP if it follows these rules.
    • A company can apply to convert to an LLP only if:
      • There is no security interest on its assets at the time of application.
      • The LLP’s partners are all the company’s shareholders, and no one else.
    • After conversion, the company, its shareholders, the LLP, and the LLP’s partners must follow these rules.

  3. Application Process

    • To convert, a company must file with the Registrar:
      • A statement from all shareholders with specific details and fees.
      • Incorporation documents and a statement as required by law.

  4. Registration of Conversion

    • The Registrar will review the documents and, if satisfied, register the LLP and issue a registration certificate. The LLP must inform the original Registrar of Companies about the conversion within 15 days.

  5. Registrar’s Authority

    • The Registrar doesn’t have to register an LLP if not satisfied with the information provided. An appeal can be made to the Tribunal if registration is refused.
    • The Registrar may ask for additional verification of documents.

  6. Effect of Registration

    • From the registration date:
      • The LLP is legally recognized.
      • All properties, rights, and obligations of the company are transferred to the LLP.
      • The company is dissolved and removed from the Registrar of Companies’ records.

  7. Property Registration

    • If the transferred property is registered with any authority, the LLP must notify the authority about the conversion as soon as possible.

  8. Pending Proceedings

    • Any legal proceedings by or against the company continue against the LLP.

  9. Enforcement of Judgments

    • Any judgment against or in favor of the company can be enforced against or by the LLP.

  10. Existing Agreements

    • All agreements involving the company continue as if the LLP is the party instead of the company.

  11. Contracts and Arrangements

    • All contracts and arrangements of the company continue with the LLP taking the company’s place.

  12. Employment Contracts

    • Employment contracts remain valid with the LLP as the employer.

  13. Appointments and Authorities

    • Any appointments or powers held by the company transfer to the LLP.

  14. Licenses and Permits

    • Licenses and permits issued to the company apply to the LLP, subject to other laws.

  15. Notice of Conversion

    • For 12 months after conversion, the LLP must state in all official correspondence that it was converted from a company and include the company’s name and registration number.
    • Failure to comply can result in fines ranging from INR 10,000 to INR 1,00,000 and additional daily fines from INR 50 to INR 500 for continued non-compliance.

Amendment Note

  • These rules were amended on 4-6-2009 and enforced from 31-5-2009.

More resources

How to Convert Private Limited Company to LLP

Complete Legal text of Schedule 3 of The Limited Liability Partnership Act, 2008

1. Interpretation .In this Schedule, unless the context otherwise requires,

(a) company means a private company as defined in clause (iii) of sub-section (1) of section 3 of the Companies Act, 1956 (1 of 1956);

(b) convert, in relation to a private company converting into a limited liability partnership, means a transfer of the property, assets, interests, rights, privileges, liabilities, obligations and the undertaking of the private company to the limited liability partnership in accordance with this Schedule.

2. Eligibility for conversion of private companies into limited liability partnership .(1) A company may convert into a limited liability partnership by complying with the requirements as to the conversion set out in this Schedule.

(2) a company may apply to convert into a limited liability partnership in accordance with this Schedule if and only if

(a) there is no security interest in its assets subsisting or in force at the time of application; and

(b) the partners of the limited liability partnership to which it converts comprise all the shareholders of the company and no one else.

(3) Upon such conversion, the company, its shareholders, the limited liability partnership into which the company has converted and the partners of that limited liability partnership shall be bound by the provisions of this Schedule that are applicable to them.

3. Statements to be filed .A company may apply to convert into a limited liability partnership by filing with the Registrar

(a) a statement by all its shareholders in such form and manner to be accompanied by such fees as the Central Government may prescribe, containing the following particulars, namely:

(i) the name and registration number of the company;

(ii) the date on which the company was incorporated; and

(b) incorporation document and statement referred to in section 11.

4. Registration of conversion .On receiving the documents referred to in paragraph 3, the Registrar shall, subject to the provisions of this Act and the rules made thereunder, register the documents and issue a certificate of registration in such form as the Registrar may determine stating that the limited liability partnership is, on and from the date specified in the certificate, registered under this Act:

Provided that the limited liability partnership shall, within fifteen days of the date of registration, inform the concerned Registrar of Companies with which it was registered under the provisions of the Companies Act, 1956 (1 of 1956) about the conversion and of the particulars of the limited liability partnership in such form and manner as the Central Government may prescribe.

5. Registrar may refuse to register .(1) Nothing in this Schedule shall be construed as to require the Registrar to register any limited liability partnership if he is not satisfied with the particulars or other information furnished under the provisions of this Act:

Provided that an appeal may be made before the Tribunal in case of refusal of registration by the Registrar.

1[Provided further that until the Tribunal is constituted under the Companies Act, 1956, the appeal under this sub-paragraph may be made before the Company Law Board.]

(2) The Registrar may, in any particular case, require the documents referred to in paragraph 3 to be verified in such manner, as he considers fit.

6. Effect of registration .On and from the date of registration specified in the certificate of registration issued under paragraph 4

(a) there shall be a limited liability partnership by the name specified in the certificate of registration registered under this Act;

(b) all tangible (movable or immovable) and intangible property vested in the company, all assets, interests, rights, privileges, liabilities, obligations relating to the company and the whole of the undertaking of the company shall be transferred to and shall vest in the limited liability partnership without further assurance, act or deed; and

(c) the company shall be deemed to be dissolved and removed from the records of the Registrar of Companies.

7. Registration in relation to property .If any property to which clause (b) of paragraph 6 applies is registered with any authority, the limited liability partnership shall, as soon as practicable, after the date of registration, take all necessary steps as required by the relevant authority to notify the authority of the conversion and of the particulars of the limited liability partnership in such form and manner as the authority may determine.

8. Pending proceedings .All proceedings by or against the company which are pending before any Court, Tribunal or other authority on the date of registration may be continued, completed and enforced by or against the limited liability partnership.

9. Continuance of conviction, ruling, order or judgment .Any conviction, ruling, order or judgment of any Court, Tribunal or other authority in favour of or against the company may be enforced by or against the limited liability partnership.

10. Existing agreements .Every agreement to which the company was a party immediately before the date of registration, whether or not of such nature that the rights and liabilities thereunder could be assigned, shall have effect as from that date as if

(a) the limited liability partnership were a party to such an agreement instead of the company; and

(b) for any reference to the company, there were substituted in respect of anything to be done on or after the date of registration a reference to the limited liability partnership.

11. Existing contracts, etc .All deeds, contracts, schemes, bonds, agreements, applications, instruments and arrangements subsisting immediately before the date of registration relating to the company or to which the company is a party shall continue in force on and after that date as if they relate to the limited liability partnership and shall be enforceable by or against the limited liability partnership as if the limited liability partnership were named therein or were a party thereto instead of the company.

12. Continuance of employment .Every contract of employment to which paragraph 10 or paragraph 11 applies shall continue in force on or after the date of registration as if the limited liability partnership were the employer thereunder instead of the company.

13. Existing appointment, authority or power .(1) Every appointment of the company in any role or capacity which is in force immediately before the date of registration shall take effect and operate from that date as if the limited liability partnership were appointed.

(2) Any authority or power conferred on the company which is in force immediately before the date of registration shall take effect and operate from that date as if it were conferred on the limited liability partnership.

14. Application of paragraphs 6 to 13 .The provisions of paragraphs 6 to 13 (both inclusive) shall apply to any approval, permit or licence issued to the company under any other Act which is in force immediately before the date of registration of the limited liability partnership, subject to the provisions of such other Act under which such approval, permit or licence has been issued.

15. Notice of conversion in correspondence .(1) The limited liability partnership shall ensure that for a period of twelve months commencing not later than fourteen days after the date of registration, every official correspondence of the limited liability partnership bears the following, namely:

(a) a statement that it was, as from the date of registration, converted from a company into a limited liability partnership; and

(b) the name and registration number of the company from which it was converted.

(2) Any limited liability partnership which contravenes the provisions of sub-paragraph (1) shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees and with a further fine which shall not be less than fifty rupees but which may extend to five hundred rupees for every day after the first day after which the default continues.

Amendment

1 Inserted by Notification GSR 386(E), dated 4-6-2009, w.e.f. 4-6-2009.

* Enforced with effect from 31-5-2009.

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