How to Convert LLP to Private Limited Company in India | Legal24by7

Converting an LLP to a Private Limited Company is a common move for businesses that have grown beyond the LLP structure and now need to raise venture capital, issue ESOPs, or professionalise their governance. The process is governed by Section 366 of the Companies Act 2013 and requires MCA approval. It is more complex than starting fresh, but it preserves the business history, existing contracts, and brand continuity.

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Step-by-Step Process

Eligibility conditions before you can convert

Your LLP must meet all of these conditions: the LLP must have been in existence for at least 1 year (filed at least one annual return with MCA). All partners of the LLP must become shareholders of the new Pvt Ltd company. No partner can have an undischarged insolvency order against them. All pending compliance filings with MCA must be cleared — no outstanding annual returns or financial statements. There must be no pending litigation or prosecution against the LLP or its partners under the LLP Act.

Step 1 — Get partner consent and draft conversion plan

Call a meeting of all partners and pass a resolution approving the conversion. Draft a conversion plan that outlines: the share capital structure of the new company, how LLP contribution will be converted to share capital, the proposed name of the Pvt Ltd company, and the proposed directors (all ex-partners become initial directors). Get the consent of all partners and secured creditors (if any) in writing before proceeding.

Step 2 — File Form URC-1 with MCA

Form URC-1 (Application for Registration of a Company) is the primary conversion form. Along with it, file: list of partners, list of creditors with their written consent to conversion, last 3 years of audited financial statements of the LLP, copy of the LLP Agreement, and copy of all LLP annual returns filed. The ROC reviews the application and may raise queries. After approval, the new company receives a fresh Certificate of Incorporation with a new CIN — it is the same legal successor to the LLP.

Step 3 — Post-conversion actions

After the new Certificate of Incorporation is issued: update all bank accounts to the company name, apply for a new GST registration under the company PAN and surrender the LLP GSTIN, update contracts with key clients and vendors, update your trademark registrations if any, file form LLP-15 to intimate the dissolution of the LLP. The LLP is automatically struck off once the company is registered as its successor.

Frequently Asked Questions

8 questions answered by our legal experts

1How long does LLP to Pvt Ltd conversion take?

The process typically takes 45–90 days from the date of filing Form URC-1, assuming all documents are correct and the ROC does not raise queries. Resolving ROC queries can add another 2–4 weeks.

2What happens to the LLP after conversion?

The LLP ceases to exist as a separate legal entity once the conversion is approved. All assets, liabilities, contracts, employees, and intellectual property of the LLP automatically transfer to the new Private Limited Company. The LLP is struck off from the MCA register.

3Do existing contracts need to be renegotiated after conversion?

Generally, contracts automatically transfer to the new company under the doctrine of legal succession. However, it is good practice to notify key clients, vendors, and banks about the change. Some contracts may have change-of-control clauses that require consent.

4What is the tax treatment of LLP to Pvt Ltd conversion?

A tax-neutral conversion is possible under Section 47(xiiib) of the Income Tax Act if: all partners become shareholders in the same profit-sharing proportion, and the shareholders do not transfer their shares for 5 years after conversion. If these conditions are not met, capital gains tax may apply on the deemed transfer of assets.

5Can the company name change during conversion?

Yes. You can choose a new name for the Pvt Ltd company or retain the LLP name without the LLP suffix. A name availability search must be done on the MCA portal. If another company already has the same name, you must choose a different one.

6What happens to the LLP GSTIN after conversion?

The GST registration of the LLP does not automatically transfer. You must apply for a new GST registration in the name of the new Pvt Ltd company and surrender the LLP GSTIN. Until the new GSTIN is active, ensure no invoices are raised under the old GSTIN.

7What are the costs involved in LLP to Pvt Ltd conversion?

Typical costs include: professional fees (CA/lawyer) of 20,000–50,000, MCA government fees typically 5,000–15,000, stamp duty on the new MoA/AoA (varies by state, 0.1–0.2% of authorised capital), and incidental costs for document preparation and notarisation.

8Is it better to convert the LLP or wind it up and start a fresh Pvt Ltd?

For established LLPs with existing clients, contracts, bank relationships, and brand value, conversion is better because it preserves legal continuity. For an LLP with no real business history or significant assets, starting fresh may be simpler and cheaper.

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How to Convert an LLP to a Private Limited Company in India