In the product development and testing phase, startup will extensively interact and transact with vendors and customers. This increases the probability of unforeseen liabilities and in turn the necessity of limited liability. Therefore, at this stage basic corporatization is advisable. This would mean that entrepreneurs may convert their partnership to LLP (limited liability partnership).
Let us understand the procedure of this conversion:
Step 1: Application for DIN or DPIN
Partners registered in a partnership firm does not generally have DIN (Director Identification Number). Therefore, partners need to apply for DIN in for DIR-3.
Step 2: Apply for Name through RUN
The first step is to search whether the proposed name of LLP is available or not. A person can apply for the Name reservation of the proposed LLP through Ministry of Corporate Affairs. The Reservation of the name of the LLP must be obtained before filing the forms for conversion of the Partnership Firm into LLP.
Step 3: Filing of Incorporation form along with Conversion form
A. Filing of Form (FiLLP) : Application for incorporation of LLP has to be filed in Form FiLLP.
Documents to be submitted:
- Form – 9 (Consent of all the partners) and Subscriber Sheet
- Registered office Address proof (Rent Agreement, NOC from owner and Utility Bill)
- Proof of Identity and Address of Designated Partners and Partners
- In case the partners are interested in any other company or LLP, details of the same are to be annexed.
B. Filing of Form LLP- 17 (Conversion of Partnership firm into LLP) : Along with form FiLLP, Form 17 for conversion of partnership firm into LLP has to be submitted simultaneously.
Documents to be submitted:
- Statement of the consent of all partners of the firm.
- List of all the secured/unsecured creditors along with their consent to the conversion.
- Latest Statement of Assets and Liabilities of partnership firm certified by a Chartered Accountant in practice.
- Acknowledgement of the latest income tax return.
- Approval from any authority/body, if required.
Step 4: Filing of LLP Agreement
LLP Agreement needs to be drafted containing all the rules and regulation of working of an LLP. LLP Agreement should be stamped and notarized and filed in LLP Form -3 within 30 days of incorporation of company.
Step 5: Certificate of incorporation
The Registrar on being satisfied will issue Incorporation certificate.
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Disclaimer: This article is for the purpose of general awareness and does not represent professional opinion of the author.