Ministry of Corporate Affairs has passed a notification on 31st May, 2016 in such notification its allowed conversion of LLP into Company.
1.Advantages of LLP Conversion into Company:
1. No capital gain tax.
2. Carry forward of unabsorbed losses and depreciation.
3. Continuation of Brand Value.
4. Existing LLP is replaced as a private limited company.
2. Prerequisites of LLP:
- Check whether LLP has filed its statutory returns upto date and file all LLP agreements including supplementary agreements with Registrar of Companies (“RoC”).
- All filed forms should be in the approved status.
- Same name of LLP can be continued if available words Private Limited shall be added with such name.
- The amount of contribution shall be equal to amount of capital and there cannot be change in such amount.
- All the partners shall become the shareholders of the Company.
- Certificate from Professional (CA/CS) regarding compliance of statement of accounts.
Conclusion:
There are various ways of converting a LLP to a company, i.e. slump sale, admitting the company as a partner, dissolution thereof and on dissolution, business being taken over by the company etc.,
In view of the choices available. Conversion should be made in a manner appropriate to a particular situation.