Converting a firm into a Limited Liability Partnership (LLP) is a popular choice among business owners due to its numerous benefits. The conversion process is relatively straightforward and involves certain steps that need to be followed. In this article, we will discuss the draft documents for conversion of firm into llp.
Application for Reservation of Name
The first step towards converting a firm into an LLP is to apply for the reservation of a name. This application needs to be made in the prescribed form with the Registrar of Companies (ROC). The name should be unique and not already in use by any other entity. Once the name is approved, it will be valid for 3 months.
Execution of the LLP Agreement
The next step is to execute the LLP agreement. The agreement should be drafted in accordance with the LLP Act, 2008 and must be signed by all the partners. It should include the name of the LLP, the name and address of the partners, the nature of the business, the rights and duties of the partners, and the profit-sharing ratio.
Application for Conversion of Firm into LLP
After the LLP agreement is executed, an application for conversion of the firm into an LLP needs to be made in the prescribed form to the ROC. The following documents must be included with the form:
- The LLP agreement
- The statement of accounts of the firm, audited by a chartered accountant
- The list of all the partners of the firm
- The consent of all the partners to become partners of the LLP
- The consent of the creditors of the firm, if any
- The approval of any other authority, if required
Obtaining the Certificate of Registration
Once the ROC is satisfied with the documents submitted, it will issue a certificate of registration. This certificate marks the completion of the conversion process, and the LLP can commence business from the date mentioned on the certificate.
Apart from the above-mentioned documents, certain other documents need to be prepared and submitted during the conversion process. These include:
- The affidavit of the designated partners of the LLP
- The declaration by the partners of the LLP
- The indemnity bond by the designated partners of the LLP
- The proof of address of the registered office of the LLP
- The proof of identity and address of the partners of the LLP
It is important to note that the conversion of a firm into an LLP may have certain tax implications. The partners should consult a chartered accountant to understand the tax implications and make the necessary changes to comply with the tax laws.
In conclusion, converting a firm into an LLP is a wise decision for business owners who wish to enjoy the benefits of limited liability and the flexibility of a partnership. The conversion process involves certain steps and the preparation and submission of various documents. Business owners should seek the help of a professional to ensure that the conversion process is smooth and hassle-free.