Conversion of Private Limited Company into Limited Liability Partnership

Private Limited into Limited Liability Partnership

The Limited liability partnership is defined as the combination of the company and partnership. It is very advantageous for small and medium-sized businesses. this form of business is governed by the Limited Liability Partnership Act- 2008, which was enforced to promote micro, small and medium enterprises.

Provided below are the advantages of LLP over PLC:

• The compliance cost is reduced.
• The Audit is conducted only in the case when the turnover and contribution is more than Rs. 40 lacs and Rs. 25 lacs respectively.
•  The profits can be easily divided among the partners without any further taxation.
• The company can easily take or provide loan to a director without and strict prohibition, unlike the private limited company.
• No restriction on party related transaction for LLP.

Understanding the benefits of LLP, the conversion of private limited companies into limited liability partnerships is very beneficial for the company. Provided below are the advantages of conversion:

• Once the conversion is done for the PLC into LLP, then all the assets and liabilities of the company would become a part of the LLP. This process does not require any stamp duty implication for this transfer.
• There is no limitation to the number of partners in the company, unlike PLC.
• It is not mandatory for the company to hold a minimum number of meetings and maintenance of statutory records.

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