A Limited Liability Partnership works well for professional firms and small businesses that value operational flexibility. But as your venture grows, attracts investor interest, or plans to scale across markets, the LLP structure can start feeling restrictive. That is when LLP to private limited conversion becomes a strategic move rather than just a compliance exercise.
Converting an LLP into a private limited company opens the door to equity funding, share-based ownership transfer, and a corporate identity that instils greater confidence among clients and investors. The process is governed by Section 366 of the Companies Act, 2013 read with the Companies (Authorised to Register) Rules, 2014. If you are a founder, partner, or advisor exploring how to convert LLP into company India regulations allow, this guide walks you through every step, document, and timeline involved.
Why Convert LLP to Private Limited Company
The decision to convert usually stems from practical business needs. An LLP cannot issue equity shares, which makes it difficult to bring in angel investors or venture capitalists. Most institutional investors insist on a private limited company structure before deploying capital because it allows them to hold shares, negotiate valuations, and exit through a defined mechanism.
Beyond fundraising, a private limited company registration carries a stronger corporate identity. Banks, large enterprises, and government agencies often prefer working with companies over LLPs when it comes to credit facilities, tenders, and strategic partnerships. The corporate structure also allows for employee stock options (ESOPs), which is a powerful tool for attracting and retaining talent in competitive markets.
Succession planning is another important factor. In an LLP, the departure or death of a partner can create complications. A private limited company enjoys perpetual succession, meaning the entity continues to exist regardless of changes in its shareholders or directors.
LLP vs Private Limited Company: Key Differences
Before initiating the conversion, it helps to understand what changes structurally when you move from an LLP to a company.
| Parameter | LLP | Private Limited Company |
| Governing Law | LLP Act, 2008 | Companies Act, 2013 |
| Ownership | Partners with capital contribution | Shareholders holding equity shares |
| Fundraising | Cannot issue equity shares | Can issue shares to investors |
| Liability | Limited to contribution | Limited to unpaid share value |
| Taxation | 30% flat rate (no concessional rate) | 25.17% effective rate |
| Annual Compliance | Form 8 and Form 11 | AOC-4, MGT-7, ADT-1, board meetings |
| ESOPs | Not possible | Can issue ESOPs |
| Perpetual Succession | Depends on LLP agreement | Yes, automatic |
Eligibility Criteria for LLP to Private Limited Conversion
Not every LLP can convert automatically. The Companies Act, 2013 lays down specific conditions that must be satisfied before the Registrar of Companies accepts the conversion application.
The LLP must have a minimum of two partners, who will become the initial shareholders and directors of the new company. There is no minimum turnover or capital requirement for the conversion itself, but the LLP must have filed all pending annual returns (Form 8 and Form 11) and must be in active status on the MCA portal. Additionally, all partners must unanimously consent to the conversion through a special resolution.
If the LLP has any outstanding liabilities, these must either be cleared or formally assumed by the new private limited company. Creditors of the LLP should be notified, and a No Objection Certificate (NOC) from creditors may be required depending on the circumstances.
Step-by-Step Process to Convert LLP into Company India
The conversion follows a structured process governed by the Companies (Authorised to Register) Rules, 2014. Here is the detailed procedure.
Step 1: Obtain Digital Signature Certificates
All proposed directors of the new private limited company need valid Digital Signature Certificates (DSC). If the existing partners already hold DSCs from the LLP registration, they can use the same. New directors must apply for fresh DSCs from a government-authorised certifying agency.
Step 2: Apply for Name Reservation
File Form INC-1 or use the RUN (Reserve Unique Name) service on the MCA portal to reserve a name for the proposed private limited company. The new name must include "Private Limited" as a suffix. You can retain the existing LLP name (without "LLP") subject to ROC approval.
Step 3: Draft MOA and AOA
Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) for the new company. The MOA defines the company's objects and scope, while the AOA lays down the internal governance rules. These documents must align with the business activities previously carried out by the LLP.
Step 4: Pass a Special Resolution
All partners of the LLP must pass a special resolution approving the conversion. This resolution must be recorded in the minutes of the partners' meeting and will form part of the ROC filing. Unanimous consent is mandatory, meaning every partner must agree to the conversion.
Step 5: File Form URC-1 with the ROC
Form URC-1 is the principal application for converting an LLP into a company. This form must be accompanied by a statement of assets and liabilities of the LLP (not older than 30 days), the NOC from creditors (or a declaration that no debt remains outstanding), the special resolution, a list of all partners with their details, and the proposed MOA and AOA. The form must be signed by all partners and verified by a practicing chartered accountant or company secretary.
Step 6: ROC Scrutiny and Approval
The Registrar of Companies reviews the application, verifies all documents, and may raise queries if any discrepancies are found. If satisfied, the ROC registers the new private limited company and issues a Certificate of Incorporation. The LLP is simultaneously dissolved by operation of law, and all its assets, liabilities, and obligations transfer to the new company.
Step 7: Post-Conversion Formalities
After receiving the Certificate of Incorporation, update all registrations including GST registration, PAN, TAN, bank accounts, and any industry-specific licences. The new company must appoint an auditor within 30 days, conduct its first board meeting, and begin filing returns under the Companies Act framework. Ongoing company compliance becomes the responsibility of the new entity from the date of incorporation.
Documents Required for LLP to Private Limited Conversion
| Document | Purpose |
| Form URC-1 | Primary conversion application |
| Statement of Assets and Liabilities | Financial position of LLP (not older than 30 days) |
| NOC from Creditors | Consent from existing creditors or declaration of no debt |
| Special Resolution of Partners | Unanimous approval for conversion |
| List of Partners with Details | Names, addresses, contribution details of all partners |
| MOA and AOA of Proposed Company | Constitutional documents of the new company |
| LLP Agreement | Existing partnership agreement for reference |
| PAN and Address Proof of Partners | Identity verification for directors and shareholders |
| DSC of Proposed Directors | Digital signing of incorporation forms |
Timeline and Estimated Costs
The LLP to private limited conversion typically takes 30 to 45 days from the date of filing Form URC-1, depending on ROC processing time and the completeness of your application. If the ROC raises queries or requests additional documentation, the timeline may extend by another two to three weeks.
The costs involved include government filing fees for Form URC-1, professional fees for a chartered accountant or company secretary handling the conversion, DSC charges for new directors, and stamp duty on the MOA and AOA (which varies by state). On average, the total cost ranges between Rs. 15,000 and Rs. 50,000 depending on the authorised capital and professional charges involved.
Tax Implications of the Conversion
One of the most common concerns during LLP to private limited conversion is the tax impact. The good news is that conversion under Section 366 of the Companies Act is not treated as a transfer under the Income Tax Act, 1961. This means there is no capital gains tax liability on the conversion itself, provided all assets and liabilities of the LLP are transferred to the new company at book value.
However, the new private limited company will need fresh GST registration under its new name and CIN. The existing GST registration of the LLP must be cancelled, and a new GSTIN obtained. PAN and TAN will also change, requiring updates across all financial and regulatory records. Carry forward of losses from the LLP to the company is subject to specific conditions under the Income Tax Act, so consult a chartered accountant before assuming continuity of tax benefits.
Conclusion
LLP to private limited conversion is a well-defined process that enables growing businesses to access equity funding, strengthen their corporate identity, and benefit from a more robust governance framework. Whether you are preparing for your first round of investor funding or want to restructure your entity for long-term scalability, converting your LLP into a private limited company is a strategic decision that pays dividends.
The process involves obtaining DSCs, reserving a name, drafting constitutional documents, passing a special resolution, and filing Form URC-1 with the ROC. With proper documentation and professional guidance, the conversion can be completed in 30 to 45 days. If you are planning to convert LLP into company India regulations require, engage a qualified chartered accountant or company secretary to ensure the transition is seamless, compliant, and tax-efficient.
