How to Convert an LLP into a Private Limited Company (Section 366)

Why convert an LLP into a company?

Investors rarely fund LLPs because they cannot hold preference shares, ESOPs are not available and foreign investment conditions are stricter. Converting to a company lets you issue equity and CCPS, grant ESOPs and adopt standard investor documents. The trade-off is more compliance and director duties under the Companies Act.

Eligibility

Since a 2018 amendment to the rules, an LLP with at least two partners can register as a company under section 366; earlier the minimum was seven. Partners approve the conversion and the draft MoA and AoA. The LLP's filings should be current, because pending defaults can hold up the application.

Documents

URC-1 and SPICe+ need documents that prove the LLP's existence, its partners and its financial position. The statement of accounts must be recent, so time the auditor's certificate close to the filing date.

• Partners' resolution approving conversion
• List of partners with shareholding they will receive
• List of creditors and their consent where required
• Statement of accounts certified by the auditor, not older than 15 days
• Copy of the URC-2 newspaper advertisement
• NOC from the LLP registrar and Stamp Act compliance certificate where applicable
• Draft MoA and AoA, director KYC and DSCs

Process and timeline

Reserve the company name, then publish URC-2 in an English and a vernacular newspaper in the district of the registered office, giving 21 days for objections. After the window closes, file SPICe+ with URC-1 and attachments. On approval the ROC issues a certificate of incorporation and the LLP's partners become shareholders as agreed.

Tax and post-conversion steps

For income-tax purposes a 'firm' includes an LLP, and under the 1961 Act the conversion of a firm into a company could be tax-neutral if section 47(xiii) conditions were met, such as all assets and liabilities moving and partners receiving only shares in their profit-sharing ratio. Take specific advice on how this applies under the Income-tax Act 2025 before converting.

After incorporation, apply for GST registration in the company's PAN or amend existing records as advised, and update bank accounts, licences, contracts and trademarks. Close the LLP's records with the registrar.

Government fees

The company name reservation costs ₹1,000. SPICe+ fees and stamp duty depend on the authorised capital and the state, with no MCA fee up to ₹15 lakh authorised capital. Newspaper advertisement costs depend on the publications chosen. Budget separately for DSCs and the auditor's certificate. If the LLP has pending Form 8 or Form 11 filings, clear them first, since additional fees of ₹100 per day per form keep accruing and the registrar may object to the conversion.

Common mistakes

Publishing URC-2 before the name is approved, using a stale statement of accounts, and ignoring pending LLP filings cause most rejections. Plan the cap table carefully, because shares issued on conversion should mirror partners' interests to stay within tax-neutral conditions.

Step by step

1. 1Partners approve

   Pass a resolution to convert and agree the share split.

2. 2Reserve name

   Reserve the company name on MCA.

3. 3Advertise URC-2

   Publish in English and vernacular newspapers.

4. 4Wait 21 days

   Allow the objection period to expire.

5. 5Prepare accounts

   Get a certified statement of accounts not older than 15 days.

6. 6File SPICe+ with URC-1

   Attach partner, creditor and accounts details.

7. 7Receive certificate

   The ROC issues the certificate of incorporation.

8. 8Update registrations

   Move GST, bank, licences and contracts to the company.