How to Convert an LLP into a Private Limited Company

Introduction

As businesses grow and seek external investment, legal flexibility, and expanded ownership structures, many entrepreneurs consider converting their Limited Liability Partnership (LLP) into a Private Limited Company. While LLPs offer limited liability and simplified compliance, Private Limited Companies provide better access to funding, broader governance models, and credibility in the corporate world. The Companies Act, 2013 and LLP Act, 2008 facilitate such a conversion through a legal and procedural framework. This article explains the step-by-step process to convert an LLP into a Private Limited Company in India.

Understand the Legal Framework

The conversion of an LLP into a Private Limited Company is governed under Section 366 of the Companies Act, 2013 and Company (Authorised to Register) Rules, 2014. It allows LLPs and other firms to register as companies if certain conditions are met. Importantly, this is not an automatic process and requires approval from regulatory authorities, especially the Registrar of Companies (ROC).

Eligibility Criteria for Conversion

Before initiating the conversion, the LLP must fulfill the following eligibility conditions:

• Must have at least two partners who are eligible to become directors under the Companies Act
  
• Must have a minimum of seven partners, as the law requires conversion under Section 366 to a company with seven or more members
  
• The LLP must have no security interest in its assets at the time of application
  
• The name of the proposed company must include the words “Private Limited”
  

Obtain Digital Signature and DIN

All proposed directors of the Private Limited Company must:

• Obtain a Digital Signature Certificate (DSC) for filing forms electronically
  
• Apply for a Director Identification Number (DIN) if they do not already possess one
  

These are essential for signing and submitting incorporation and conversion documents through the MCA portal.

Conduct a Meeting and Take Consent

A formal meeting of all partners of the LLP must be held to:

• Pass a resolution for the conversion
  
• Approve the new Memorandum of Association (MOA) and Articles of Association (AOA)
  
• Appoint directors and authorize one or more partners to complete the conversion formalities
  Written consent from all existing partners must be obtained and documented.
  

Reserve the Company Name

Apply for name reservation using Part A of the SPICe+ form or the RUN (Reserve Unique Name) service on the MCA portal. The name should be distinct and compliant with the naming guidelines. It should also reflect that the entity is being converted from an LLP to a Private Limited Company.

File Form URC-1 with Required Documents

Form URC-1 (Uniform Registration Code) is the key form for registering entities being converted into companies. The following documents must be submitted with it:

• List of all partners and shareholders with details
  
• Consent from at least three-fourths of the partners
  
• Statement of assets and liabilities certified by a Chartered Accountant
  
• Copy of the LLP agreement and certificate of registration
  
• Declaration from all partners confirming compliance with legal requirements
  
• Affidavit verifying the list of partners
  
• NOC from creditors and authorities (if applicable)
  

Submit Incorporation Forms

Along with URC-1, submit the following forms:

• SPICe+ Part B: Incorporation form
  
• SPICe MOA and AOA: Charter documents for the Private Limited Company
  
• AGILE-PRO: For GST, EPFO, ESIC, and bank account registration
  
• INC-9 and DIR-2: Declaration by subscribers and directors
  

All forms must be digitally signed using the DSCs of the directors and professionals.

Verification by Registrar of Companies

The Registrar of Companies will scrutinize all documents submitted. If found in order, the ROC will issue a Certificate of Incorporation. The date mentioned on this certificate is the legal date from which the Private Limited Company exists. The LLP stands dissolved, and all its assets, liabilities, and contracts are vested in the newly incorporated company.

Post-Conversion Compliance

After conversion, the company must:

• Update PAN, TAN, and bank records
  
• Inform customers, vendors, and tax departments of the change
  
• Amend agreements and licenses in the new name
  
• Maintain statutory registers and follow company compliance norms such as board meetings, annual filings, and auditor appointments
  

Conclusion

Converting an LLP into a Private Limited Company is a strategic decision that supports business scalability, funding, and formal governance. While the process requires legal documentation, partner consent, and approval from the Registrar of Companies, it allows entrepreneurs to retain limited liability while gaining access to enhanced credibility and structural benefits. With proper planning and professional support, the conversion can be completed smoothly, setting the stage for sustainable growth.

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