Post on 23-Feb-2016
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Bangalore Chapter-The ICSI, Fully Day Seminar on LLP Act, 2008
on 23-11-2013
Conversion of Companies and Partnership Firms into LLP
By CS Thirupal Gorige,Practising Company Secretary
Conversion of Companies/Firm into LLP- Practical Aspects
• Pre- Requisites/ Conditions• Procedure• Post- Conversion activities • Taxation advantages
Conversion of Companies into LLP- Pre- Requisites/ Conditions
From Company• No-Pending of E-forms filed by Com.• No Charges should subsist at MCA site• Company should be having share capital• Section 25 Com. are not allowed • One financial year must over• Update filing of all forms and returns • Update - income tax filings
Conversion of Companies into LLP- Pre- Requisites/ Conditions
From Director/shareholders• At DIN -residential status must (For DP)• DIN –PAN integration (For DP)• PAN/ passport (partners)• PAN containing abbreviation are not allowed
Conversion of Companies into LLP- Procedure
From Company• Board Resolution• Filing of form 1 –Name availability• Filing of form 2- With subscriber sheet and
Proof of address• Filing of form 18 • Filing of form 3• Filing of form 14
Conversion of Companies into LLP- Procedure
Things to be ensured before or at time of filing of form 18
(i) Individual Consent/statement (as per Part-B of form 18) from shareholders
(ii) Disinterested Shareholders, if any, to be provided exit option, (share acquisition/ transfer) otherwise no conversion
Conversion of Companies into LLP- Procedure- Filing form 18
(iii) Only shareholders can be partners no one else(iv) Security interest in the assets, if any, to be
disclosed (may be a pledge)(v) Latest IT filing acknowledgement to be
enclosed(vi) Details of prosecution initiated against or
show cause notice u/CA on Com. (can be verified at Master Data)
Conversion of Companies into LLP- Procedure- Filing form 18
(vii) Proceedings by or against the company is pending in any Court or Tribunal or any other Authority. ( under any LAW)
(viii) Rejection of earlier application for conversion, if any –SRN of old F18 and reasons
(ix)Details of conviction, ruling, order, judgment of any Court- subsisting if any
(x) consent of all the secured creditors with list, if any,
Conversion of Companies into LLP- Procedure- Filing form 18
(x) Clearance, approval or permission from any body/ authority, if any, (SEBI_ For stock broker / Investment Advisors Com.)
(xi) Statement of Assets and Liabilities of the company duly certified as true and correct by the auditor ( Similar to FTE) & 2 Directors
Conversion of Companies into LLP Procedure
Filing Form 3 • Within 30 days of date of registration of the LLP• With signed LLP agreement- (on Stamp Paper)Filing of form 14• Within15 days of the date of registration of the
LLP with ROC• Attachment- LLP Conversion Certificate• Digitally signed by one of the directors in the
company before conversion
Conversion of Firm into LLP Pre- Requisites/ Conditions
-DINs for DPs-PAN /Passport for partners-DSCs minimum for 2 DPs-Firm must be have registered with Partnership
Act 1932 or such other Act-At least one financial year must have been
completed-All partners should be partners of LLP no one
else.
Conversion of Firm into LLP- Pre- Requisites/ Conditions
-Update Income tax filings-Liabilities and obligations of the firm prior to
the conversion- Unlimited liability-Settlement with disinterested partners and re-
constitution of Partnership deed and its registration
-Obtaining list of present partners from Registrar of Firm /other authority
Conversion of Firm into LLP- Procedure
• Partners Resolution• Filing of form 1 –Name availability• If existing name not available -Change of name of
partnership/reconstitution deed & its registration• Filing of form 2- With subscriber sheet and Proof
of address• Filing of form 17 • Filing of form 3• Filing of form 14 (Physically)
Conversion of Firm into LLP- Procedure-Filing Form 17
Things to be ensured before or at time of filing of form 17
-(i) Individual Consent/statement (as per Part-B of form 17) from partners
(ii) Only partner for firm can be partners no one else(iii) Security interest in the assets, if any, to be
disclosed (may be a pledge)(iv) Latest IT filing acknowledgement to be enclosed
Conversion of Firm into LLP- Procedure-Filing Form 17
(v) Proceedings by or against the Firm is pending in any Court or Tribunal or any other Authority. ( under any LAW)
(vi) Rejection of earlier application for conversion, if any –SRN of old 17 -
(vii)Details of conviction, ruling, order, judgment of any Court- subsisting if any
(viii) consent of all the secured creditors with list, if any,
Conversion of Firm into LLP- Procedure-Filing Form 17
(ix) Clearance, approval or permission from any body/ authority, if any, (SEBI_ For stock broker / Investment Advisors Com.)
(x) Statement of Assets and Liabilities of the company duly certified as true and correct by
Chartered Accountant in practice
Conversion of Firm into LLP- Procedure
Filing Form 3 • Within 30 days of date of registration of the LLP• With signed LLP agreement- (on Stamp Paper)Filing of form 14• Within15 days of the date of registration of the
LLP (together with Conversion Certificate) with Registrar of Firm
• Physically signed by one of the partners of firm before conversion
Conversion of Company/Firm into LLP
Other -Post Conversion IssuesIn Case of Company ConversionObtain-Fresh IT PAN/ TAN-New Bank Account-All other applicable Licences like Service Tax, VAT, Excise,
Customs, IEC etc.MaintainFormerly known as “…………Private Limited” (regd.No.08/……..)
converted and registered as LLP on 31-03-2013 vide LLPIN:……. with limited liability- for 12 months
Conversion of Company/Firm into LLP
Other -Post Conversion IssuesIn Case of Firm into LLPObtain-Alteration of IT PAN/ TAN-Change of name in existing Bank Accounts-Intimation to all other applicable Licences like
Service Tax, VAT, Excise, Customs, IEC etc and obtain the change of name effected in their records.
Conversion of Company/Firm into LLPPost Conversion EffectIn case of Company ConversionStamp duty issues (If any, immovable property involved) (Some
state Govts.not accepting)Capital Gain Taxation ( If criteria mentioned at IT Act, 1961 is not
satisfied)No DDT/ Deemed dividend/TDS etc but AMT appliesRPTs allowed/ no approval 295, 297, 314; Sch XIII etcCarry forward loss & Acc. Dep next 8 yrs.Tax Saving as per illustration.Unlimited no. of partners No audit upto Rs.40 lakhs Turnover/ Rs25 lakhs Contribution
Conversion of Company/Firm into LLPPost Conversion EffectIn case of Company ConversionCriteria as per IT-Last 3 years average turnover of Company should be less than 60
lakhs (eligibility)-No consideration to partners fr conversion-All assets of company to be assets of LLP-All shareholders to be partners of LLP-Accumulated profits on date of Conversion are not allowed for
distribution for next 3 years from date of conversion (Post)-50% of shareholders of Company should continue to hold for next
5 years (Post)
Conversion of Company/Firm into LLP
Post Conversion EffectIn case of Firm ConversionNo Stamp duty issues even if immovable properties
are involvedNo Capital gains as per IT, reason IT firm includes LLP
there same status continuesMaintainFormerly known as “…………Firm” (regd.No./……..)
converted and registered as LLP on 31-03-2013 vide LLPIN:……. with limited liability- for 12 months
Thought -Forever • “Teach yourselves, teach everyone his/her real
nature, call upon the sleeping soul and see how it awakes. Power will come, glory will come, goodness will come, purity will come, and everything that is excellent will come, when this sleeping soul is roused to self conscious activity.” —Swami Vivekananda
Further Discussions
• Thanks to one and all for providing opportunity to me to
share my experience gained accidentally