Convert Private Limited Company to LLP
If your company has more paperwork than it needs but you still want limited liability, you can convert company to LLP under Section 56 and the Third Schedule of the LLP Act, 2008. The company files FiLLiP with Form 18 on the MCA V3 portal, and the conversion can be tax-neutral if seven conditions are met.
What it is
Conversion lets an existing private limited company become a limited liability partnership without winding up. No court, no liquidator. The business carries on in the LLP, with the same assets, debts and contracts. The shareholders become partners. Once the Registrar registers the LLP, the company is treated as dissolved and its name comes off the Registrar of Companies’ records.
The law is Section 56 of the Limited Liability Partnership Act, 2008, read with its Third Schedule and Rule 39 of the LLP Rules, 2009. You apply in Form 18 (Part A is the application, Part B the statement of shareholders), filed together with FiLLiP, the LLP incorporation form, on the MCA V3 portal. If the Registrar is satisfied, the LLP receives its certificate of registration in Form 19.
Who it applies to
You run a small company like a partnership
You file AOC-4 and MGT-7, hold board meetings and pay for a statutory audit every year, yet the two or three owners decide everything across one table.
You have no plans to raise equity
Think of two brothers in Ballabgarh running a small trading company their father set up. They work in it daily and will never sell shares to an investor.
Your company has no live charge
The Third Schedule allows conversion only when no security interest in the company’s assets is subsisting or in force at the time of application. Every shareholder must become a partner, and no one else.
Why it matters
File two annual forms, not a full set
An LLP files two annual forms: Form 11 by 30 May and Form 8 by 30 October. An audit is needed only if turnover crosses ₹40 lakh or contribution crosses ₹25 lakh.
Keep limited liability
Partners’ liability is limited to their agreed contribution, just as shareholders’ liability was limited to their shares.
Carry on without a break
Property, contracts, licences and pending proceedings pass to the LLP by law. You do not sell assets or close the company first. Customers simply see a new name.
Documents required
From the company
- Board resolution approving the conversion and authorising a director
- Statement of assets and liabilities certified by the auditor, not older than 30 days
- Latest audited financial statements and income tax return acknowledgement
- MoA and AoA, and the certificate of incorporation
From shareholders and creditors
- Written consent of every shareholder to the conversion
- List of creditors with their written consent
- Consent of secured creditors, if any charge existed
- Proof that any charge on the MCA register has been satisfied
For the new LLP
- Name reserved through RUN-LLP
- Designated partners’ details, DIN or ID and address proof
- Digital signature certificates of the designated partners
- Draft LLP agreement and registered office proof
Company vs LLP at a glance
| Private limited company | LLP after conversion | |
|---|---|---|
| Owners | Shareholders | Partners (all former shareholders) |
| Annual ROC forms | AOC-4 and MGT-7 / MGT-7A | Form 11 and Form 8 |
| Audit | Every year, whatever the size | Only above ₹40 lakh turnover or ₹25 lakh contribution |
| Raising equity | Can issue shares to investors | Investors must join as partners |
| Profit taken out | Salary or dividend | Share of profit, remuneration and interest to partners |
Here is the catch: an LLP suits owner-run businesses. If you plan venture funding or ESOPs, stay a company. If you might need that later, the reverse route exists under Section 366 of the Companies Act, 2013, but it takes its own filings and time.
How it works
Check eligibility and the tax test
We check the charge register, the shareholding and three years of turnover and asset figures. You learn on day one whether it can be tax-neutral.
Pass the resolutions and collect consents
The board approves the conversion. We draft the shareholder and creditor consents and get the auditor-certified statement of assets and liabilities.
Reserve the LLP name
We file RUN-LLP with the board resolution. Usually the name stays the same, with “LLP” in place of “Private Limited”.
File FiLLiP with Form 18
Both forms go together on the MCA V3 portal, signed with the designated partners’ DSCs. A director who already holds a DIN does not need a separate DPIN.
Receive Form 19 and file the LLP agreement
The Registrar issues the certificate of registration in Form 19. We file the LLP agreement in Form 3 within 30 days and inform the Registrar of Companies of the conversion within 15 days.
Move PAN, GST, bank and licences
The LLP gets its own PAN and TAN. Bank accounts, GST registration and trade licences are moved to the LLP’s name.
Timelines
Allow 30–45 working days
From board resolution to Form 19 usually takes 30–45 working days, depending on how fast consents come in and whether the Registrar raises queries.
File Form 3 within 30 days
The LLP agreement must be filed in Form 3 within 30 days of registration. Late filing attracts additional fees under the LLP (Amendment) Rules, 2022.
Mention the conversion for 12 months
For 12 months after conversion, the LLP’s letters and invoices must state that it was converted from a company, with the company’s name and registration number.
Tax-neutral conversion conditions
On conversion the company’s assets move to the LLP and the shareholders give up their shares. Both count as transfers for capital gains. The Income-tax law exempts them only if every condition below holds. For conversions up to 31 March 2026 the clause is Section 47(xiiib) of the Income-tax Act, 1961. From tax year 2026-27 it is Section 70(1)(ze) of the Income-tax Act, 2025, with the same seven conditions.
| Condition | What it means |
|---|---|
| All assets and liabilities move | Everything the company holds immediately before conversion becomes the LLP’s |
| All shareholders become partners | Capital contribution and profit-sharing ratio in the same proportion as shareholding on the date of conversion |
| No other consideration | Shareholders receive nothing except their share of profit and capital contribution |
| 50% for five years | Former shareholders together hold at least 50% of the profit-sharing ratio at all times for five years |
| Turnover limit | Sales, turnover or gross receipts not above ₹60 lakh in any of the three preceding years |
| Asset limit | Total value of assets in the books not above ₹5 crore in any of the three preceding years |
| No payout of old profits | Nothing paid to any partner out of the company’s accumulated profit for three years |
In practice, most companies fail on turnover. A Faridabad engineering supplier with ₹2 crore of sales can still convert under the LLP Act, but the transfer is then taxed as capital gains. We work the numbers before you decide.
What happens if a tax condition is broken
You pay tax on the exempted gain
Under Section 47A(4), the gain that was not taxed becomes taxable in the hands of the LLP or the shareholder in the year the condition is broken.
You may lose old losses and MAT credit
Business losses and unabsorbed depreciation of the company carry forward to the LLP only when the conversion is tax-neutral. MAT credit does not carry forward at all.
The Registrar rejects Form 18
A live charge on the MCA register, or a shareholder missing from the partner list, stops Form 18. Get the charge satisfied and the consents in hand first.
Frequently asked questions
Can any private limited company convert into an LLP?
Yes, if it meets the Third Schedule of the LLP Act, 2008. No security interest in its assets can be subsisting or in force when it applies, and the LLP’s partners must be all the company’s shareholders and no one else. Unlisted public companies have a separate route under Section 57. Most small private companies qualify once old charges are formally closed on the MCA register.
Which forms are filed to convert a company into an LLP?
The main forms are RUN-LLP for the name, then FiLLiP together with Form 18 on the MCA V3 portal. Form 18 has two parts: Part A is the application and Part B is the statement of shareholders, as Rule 39 of the LLP Rules, 2009 requires. The Registrar issues Form 19 as the certificate of registration. The LLP agreement follows in Form 3 within 30 days.
Is the conversion of a company into an LLP taxable?
It is tax-neutral only if all seven conditions in Section 47(xiiib) of the 1961 Act, now Section 70(1)(ze) of the Income-tax Act, 2025, are met. The key limits are turnover of ₹60 lakh and book assets of ₹5 crore in each of the three preceding years. If the company crosses either limit, the conversion is still legal, but capital gains tax applies. We check this before you file anything.
What happens to the company’s assets and contracts?
They pass to the LLP automatically on registration under the Third Schedule. Property, bank balances, contracts, licences and pending legal proceedings continue in the LLP’s name, and the company is treated as dissolved. In practice, you still update title records, bank mandates, GST and other registrations so that third parties see the new name. We give you a checklist for it.
What if the company has a bank loan with a charge?
You cannot apply while the charge is subsisting. The Third Schedule requires that no security interest is in force at the time of application, so repay the loan and file the satisfaction of charge in Form CHG-4 before you apply. A charge that was repaid long ago but never closed on the MCA register will also block Form 18, so we check the register first.
How long does the conversion take?
Plan for about 30–45 working days from the board resolution to the Form 19 certificate. Name approval, collecting every shareholder’s and creditor’s consent, and any query from the Registrar decide the pace. The LLP agreement must then be filed in Form 3 within 30 days of registration. When the documents are ready on day one, the timeline usually runs at the shorter end.
Can the profit-sharing ratio change after conversion?
It can, but carefully. For a tax-neutral conversion, the profit-sharing ratio must start in the same proportion as the shareholding, and former shareholders must keep at least 50% of the profit-sharing ratio at all times for five years. Admitting a new partner with a small share is usually fine. Handing over control in year three is not: the exempt gain becomes taxable. We can model a planned change before you sign it.
Does the LLP need a new PAN and GST registration?
Yes, the LLP is a new taxpayer with its own PAN and TAN. GST registration, bank accounts, import-export code and other licences are moved to the LLP’s name after Form 19 is issued. Customers should get the new details in writing. For 12 months, the LLP’s letters and invoices must also mention that it was converted from the company. Fix a switch-over date and invoicing carries on without a gap.
What filings does the LLP have after conversion?
Each year the LLP files Form 11, the annual return, by 30 May and Form 8, the statement of account and solvency, by 30 October. It also files its income tax return. A tax audit or statutory audit applies only when the thresholds are crossed, such as ₹40 lakh turnover or ₹25 lakh contribution for the LLP audit. That is a much shorter list than a company’s.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
The government fee for FiLLiP depends on the LLP’s capital contribution, and Form 3 filed after 30 days attracts additional fees under the LLP (Amendment) Rules, 2022. Stamp duty on the LLP agreement depends on your state.
Ready to begin?
Send us three years’ financials and your shareholding. We will tell you, before any filing, whether your conversion can be tax-neutral.