Convert LLP to Private Limited Company
You can convert an LLP to a private limited company without closing the business. Under Section 366 of the Companies Act, 2013, the LLP publishes a Form URC-2 notice, waits 21 clear days for objections, then files Form URC-1 with SPICe+ on the MCA V3 portal. We handle every step, including the capital gains check.
What it is
Converting an LLP into a private limited company means the same business, with the same owners, registers again under the Companies Act, 2013. The partners become shareholders, and everything the LLP owns or owes passes to the company. Nothing is wound up; the company takes the LLP’s place.
The legal route is Section 366 of the Companies Act, 2013, in Part I of Chapter XXI. It counts an LLP as a “company” that may register under the Act, and the Companies (Authorised to Register) Rules, 2014 set out the procedure. The application is Form URC-1, filed with SPICe+ on the MCA V3 portal. Still comparing structures? Read how an LLP is registered and what private limited company registration involves.
Who it applies to
Raise equity or plan stock options
Take a Faridabad software LLP that has found an angel investor: the investor wants shares, and the LLP has none to give. Converting first solves that.
Start with two or more partners
The company needs two or more members and at least two directors. With fewer than seven members, Rule 3(1) requires registration as a private company.
Clean up the LLP’s record first
The LLP must declare that every document due under the LLP Act is filed, and every secured creditor must give consent or an NOC. Pending Form 8 or Form 11? Those come first.
Why it matters
Keep the business running through the change
Under Sections 368 to 370, the LLP’s property vests in the company, its debts and obligations stay alive, and pending cases continue.
Open the door to equity funding
A company can issue shares to new investors and stock options to staff. An LLP can do neither.
Protect the tax exemption from day one
Conversion can be tax-neutral only if strict conditions are met on day one and kept for five years. One wrong share allotment can make it taxable.
Documents required
Pull from the LLP’s records
- LLP agreement and certificate of incorporation
- Auditor-certified statement of accounts, no more than 15 days old, plus the last audited financial statements
- Latest income tax return
- Written consent or NOC from every secured creditor
- Declaration that all LLP filings are complete, and a statement of pending cases
Collect from every partner
- Written consent to the conversion, given at a meeting
- Notarised affidavit from all partners for the LLP’s dissolution
- List of partners with the shares each one will hold
Prepare for the new company
- Proposed memorandum and articles of association
- DIN, DSC and consent of each director, plus a non-disqualification declaration
- Registered office proof
- URC-2 newspaper clippings and proof of notice served on the Registrar (LLP)
How it works
Clear every pending Form 8 and Form 11
We check every past year, file anything missing, then collect the partners’ consent and secured creditors’ NOCs.
Reserve the name through SPICe+ Part A
In practice, the company usually keeps the LLP’s name, with “Private Limited” in place of “LLP”. We file SPICe+ Part A. Any director without a DSC or DIN gets one now.
Publish Form URC-2 and notify the Registrar (LLP)
The notice runs in an English and a vernacular-language newspaper circulating in your district, with a copy served on the Registrar (LLP). Objections can come in for 21 clear days.
File Form URC-1 with SPICe+ Part B
We file URC-1 with SPICe+ Part B, the e-MoA (INC-33), the e-AoA (INC-34) and AGILE-PRO-S, attaching the certified accounts and all consents.
Collect the certificate, then switch GST and banks
The Registrar considers any objections and issues the certificate of incorporation with the company’s PAN and TAN. We then handle the first auditor, GST and bank changes.
Timelines
Wait 21 clear days after the notice
Objections can be raised within 21 clear days of the URC-2 notice. The Registrar then considers those received within 30 days of publication.
Use accounts no more than 15 days old
The auditor-certified statement of accounts must be made up to a date within 15 days before the application.
Plan for 30 to 60 days in all
That includes the notice period and the Registrar’s review. After registration, the board must appoint the first auditor within 30 days.
Income tax and GST on conversion
Start with what does not apply. Section 47(xiiib) of the Income-tax Act, 1961, now Section 70(1)(ze) of the Income-tax Act, 2025, covers a company becoming an LLP, not your move. No clause is written specifically for an LLP becoming a company.
Because the Act defines “firm” to include an LLP, advisers rely instead on the firm-to-company exemption in Section 47(xiii), which is Section 70(1)(zd) for conversions from 1 April 2026. Its use for LLPs is debated. It holds only if all four conditions are met: all the business’s assets and liabilities pass to the company; every partner becomes a shareholder in the ratio of their capital account; no partner gets anything other than shares; and the partners together keep at least 50% of the voting power for five years.
Here is the catch: one slip undoes it. Say three partners of a Ballabgarh trading LLP convert, and one takes cash instead of shares. That breaks the conditions, and Section 47A(3) taxes the exempted gain in the company’s hands for that year. The LLP still reports its income up to the conversion date; the company reports after it.
On GST, the company has a new PAN, so it needs its own GST registration. The LLP’s unused input tax credit can move across through Form GST ITC-02, and the LLP’s registration is then cancelled.
LLP vs private limited after conversion
| Point | As an LLP | As a private limited company |
|---|---|---|
| Governing law | LLP Act, 2008 | Companies Act, 2013 |
| Owners | Partners | Shareholders |
| Run by | Partners, under the LLP agreement | Board of directors (minimum two) |
| Raising equity | No shares; new capital comes as partner contribution | Can issue shares and stock options |
| Statutory audit | Only above ₹40 lakh turnover or ₹25 lakh contribution | Every company, every year |
| Annual MCA forms | Form 11 and Form 8 | AOC-4 and MGT-7 or MGT-7A |
| Income tax rate | 30%, plus cess and any surcharge | 22% under the concessional regime, about 25.17% with surcharge and cess |
A company means more paperwork each year, in return for shares and the option of the lower concessional tax rate.
What happens if you skip a step
Skip old LLP filings, and the application stalls
Rule 5 needs a declaration that all LLP filings are complete. Late Form 8 and Form 11 carry an additional fee in multiples of the normal fee, and the multiple rises with delay.
Ignore an objection, and registration can be refused
Anyone, including a creditor or the Registrar (LLP), can object during the notice period. The Registrar weighs them before deciding whether to register the company.
Break a tax condition, and the gain turns taxable
A cash payout to one partner does it. So does the partners’ combined stake falling below 50% within five years. Either way, Section 47A(3) taxes the exempted gain in the company’s hands.
Frequently asked questions
Can an LLP be converted into a private limited company?
Yes. Section 366 of the Companies Act, 2013 lets an LLP register as a company, following the Companies (Authorised to Register) Rules, 2014. You publish Form URC-2, wait 21 clear days for objections, and file Form URC-1 with SPICe+ on the MCA V3 portal. The business carries on throughout, and what the LLP owns and owes passes to the company.
How many partners are needed to convert an LLP into a company?
At least two. The company must have two or more members, and a private company needs at least two directors under Section 149(1)(a). With fewer than seven members, Rule 3(1) requires registration as a private company. The same two people can be shareholders and directors, so a two-partner LLP needs no one new.
How long does the conversion take?
A conversion usually takes 30 to 60 days from start to certificate. The fixed part is the 21 clear days after the Form URC-2 notice; the Registrar then decides after considering objections received within 30 days of publication. The rest depends on how fast NOCs and documents arrive. Start with clean LLP filings, and the timeline stays short.
Is converting an LLP into a company tax-free?
It can be, but not automatically. Section 47(xiiib) covers only the reverse move. For an LLP becoming a company, advisers rely on the firm-to-company exemption in Section 47(xiii), now Section 70(1)(zd) of the Income-tax Act, 2025. Its use for LLPs is debated, and the partners must keep at least 50% of the voting power for five years. We check all of this before you file.
What happens to the LLP’s property, loans and contracts?
They pass to the company by law. Section 368 vests the LLP’s movable and immovable property in the company, Section 369 keeps its debts and obligations alive, and Section 370 lets pending cases continue. You still update title records, bank accounts and licences in the company’s name; we give you a checklist so nothing is missed.
Does the company need a new GST registration?
Yes. The company has its own PAN, so it needs a fresh GST registration, which can be applied for with SPICe+ through AGILE-PRO-S. The LLP’s unused input tax credit can then move to the company through Form GST ITC-02, after which the LLP’s registration is cancelled. Done in this order, the credit follows the business.
What is Form URC-2, and where is it published?
Form URC-2 is the public notice of the conversion. It appears in an English newspaper and a vernacular-language newspaper circulating in the district, inviting objections within 21 clear days. A copy is served on the Registrar (LLP), and proof of service goes with Form URC-1. We draft the notice and book the newspapers, so the clock starts on time.
Must the LLP’s annual filings be up to date before conversion?
Yes. With Form URC-1, the LLP declares that it has filed every document due under the LLP Act, including Form 8 and Form 11 for each past year. Since 1 April 2022, late LLP forms carry an additional fee set as a multiple of the normal fee. If some years are pending, we file them first and then start the conversion.
Do all partners have to become shareholders?
For the tax exemption, yes. Every partner must become a shareholder in the ratio of their capital account and receive nothing but shares. The partners together must keep at least 50% of the voting power for five years, so an LLP that converts in 2026 and brings in a fund in 2028 must hold that line until 2031. The Rules need only majority consent; we still take every partner’s in writing.
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.
Ready to begin?
Send us your LLP agreement, latest accounts and list of partners. We will check the filings and the tax conditions, then give you a written conversion plan.