A company owned privately for businesses which are small in size is called a Private Limited Company whereas an LLP is a hybrid of a company and a partnership where each partner’s liability is limited to his/her contribution to the capital.
First, as a prerequisite for conversion, every member of the company should agree to convert and become a partner of the LLP. Latest tax return is to be filed with ROC and No objection certification form creditors is to be obtained.
Then, a board meeting is to be convened for passing of resolution for conversion and filing of the same with the Ministry for Corporate Affairs.
Next, application for availability of name is filed and so is the incorporation form with the required documents
Next, the application for conversion is filed with ROC and once approved, the ROC issues a certificate of incorporation for the LLP.
As a next step, the LLP agreement is drafted and filed in the appropriate form.
ADVANTAGES / FEATURES
It is a separate legal entity which can sue and be sued in its own name.
There is no distinction between who owns and manages the business since partners do both unlike what happens in a company.
Partners have flexibility in the type of agreement they want to create outlining their rights and duties.
There is limited liability of partners only to the extent of their contribution.
An LLP has fewer compliance requirements in comparison to a company.
Also, an LLP is easy to wind-up in comparison to a company.
Statement of consent from shareholders, NOC from creditors, audited accounts and copy of acknowledgment of latestIT return.