Conversion of a Partnership into an LLP – Overview
A Limited Liability Partnership (LLP) is often a more advantageous business structure compared to a traditional partnership. Unlike standard partnerships, where partners bear personal liabilities, an LLP provides limited liability protection while eliminating the restrictive provisions of the Indian Partnership Act of 1932. Additionally, LLPs offer tax benefits, exemptions from audits below a certain capital threshold, no cap on the number of partners, and no restrictions on capital contributions.
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Conditions for Converting a Partnership Firm into an LLP
Consistent Partner Structure: During the conversion process, no new partners can be
added, and existing partners cannot leave. All current partners of the firm must
continue as partners in the LLP.
Digital Signature and DPIN Requirement: At least two partners must have a Designated
Partner Identification Number (DPIN), and all partners must hold a valid Digital
Signature Certificate (DSC) before submitting the application.
Registration Under the Partnership Act: The partnership firm undergoing conversion
must be a registered entity under the Indian Partnership Act, 1932.
Unanimous Approval: All partners must agree to the conversion.
Same Partner Structure: The partners of the LLP must be the same individuals as
those in the original partnership firm.
Exit Option After Conversion: Once the conversion process is completed, partners may
choose to exit the LLP if they wish.