How to Convert LLP to Private Limited Company in India

Key Takeaways

• An LLP converts into a Private Limited Company under Section 366 of the Companies Act, 2013, read with the Companies (Authorized to Register) Rules, 2014. The law treats the conversion as a fresh registration of the LLP as a company.
• All partners must provide written consent for the conversion. Even one dissenting partner can prevent the conversion.
• The LLP must publish Form URC-2 in one English and one vernacular newspaper and wait 21 days for objections before filing Form URC-1.
• The conversion application includes Form URC-1 along with SPICe+, e-MOA, e-AOA, AGILE-PRO, and INC-9.
• After approval, the ROC issues a new Certificate of Incorporation with a new CIN. The LLP stands dissolved, and the company must obtain a fresh PAN, TAN, and GST registration.

Why Convert Your LLP to a Private Limited Company? 

Converting an LLP to a Private Limited Company unlocks several advantages that the LLP structure does not offer. These include:

• Equity funding: A Private Limited Company can issue equity shares to angel investors and VCs, which an LLP cannot.
• ESOPs: Companies can grant employee stock options to attract and retain talent.
• Credibility and scale: Investors, banks, and large clients prefer a company structure.
• Structured ownership: Shareholding, board governance, and share transfers give a clear framework for growth.
• Easier FDI: A Private Limited Company can accept foreign investment more readily under the automatic route.
• Lower tax rate: Companies pay 22–25% corporate tax as compared to a flat 30% for LLPs, often reducing the overall tax burden.
• Perpetual succession: Ownership transfers through shares without disrupting the company’s existence.
• Better fundraising options: Beyond equity, companies can raise debt through debentures and convertible instruments.

Tax Implications of Converting an LLP into a Private Limited Company

Along with the other benefits of conversion, an LLP can also qualify for tax advantages when converted into a Private Limited Company, subject to the prescribed conditions.

To claim the exemption, you must satisfy the following conditions:

• Ensure the former partners collectively hold at least 50% of the company’s voting power for five years from the date of conversion.
• Transfer all the LLP’s assets and liabilities to the company.
• Make all LLP partners shareholders in the same proportion as their capital accounts in the LLP on the date of conversion.
• Issue only shares to the partners and provide no other consideration or benefit.

If you fail to meet or later breach any of these conditions, the exemption is withdrawn. Moreover, the capital gains become taxable in the year of the breach.

Note: Subject to the Income Tax Act, 2025, the company may carry forward the LLP’s accumulated business losses and unabsorbed depreciation.

Legal Obligations for Converting an LLP to a Private Limited Company

Section 366 of the Companies Act, 2013, read with the Companies (Authorized to Register) Rules, 2014, governs the conversion of an LLP into a Private Limited Company. 

Since the LLP Act does not provide a direct conversion mechanism, the law treats the process as the registration of an existing LLP as a company under the Companies Act. The Companies (Incorporation) Rules, 2014, govern the incorporation process and the filing of SPICe+ forms.

The key legal provisions are:

Legal Provision	Purpose
Section 366 of the Companies Act, 2013	Permits eligible entities, including LLPs, to register as companies under the Companies Act.
Companies (Authorized to Register) Rules, 2014	Prescribe the eligibility conditions, documents, public notice requirements, Forms URC-1 and URC-2, declarations, and the registration procedure.
Companies (Incorporation) Rules, 2014	Govern the incorporation process through SPICe+, e-MOA, e-AOA, AGILE-PRO, INC-9, and other incorporation requirements.

Eligibility Criteria for Conversion of LLP to Private Limited Company under Section 366

Not every LLP can convert into a Private Limited Company. Therefore, before initiating the conversion, ensure that your LLP meets the following eligibility requirements:

1. Have at Least Two Partners: The LLP must have at least two partners on the date of application.

2. Obtain Unanimous Consent from All Partners: All partners must provide their written consent to the conversion. The LLP should also pass a resolution approving the conversion.

3. Complete Statutory Compliances: The LLP must have filed all mandatory statutory returns, including Form 8 and Form 11, and must be up to date with its compliance requirements.

4. Obtain NOCs from Secured Creditors: The LLP must obtain No Objection Certificates (NOCs) from all secured creditors. If it has no secured debt, it must submit a declaration to that effect.

5. Meet the Minimum Company Requirements: The proposed Private Limited Company must have:

• At least 2 shareholders
• At least 2 directors
• At least 1 resident director (a person who stayed in India for at least 182 days during the financial year)

Documents Required for Conversion of LLP to Private Limited Company

To convert an LLP into a Private Limited Company, you must submit the Unregistered Companies-1 (URC-1) form along with the SPICe+ incorporation forms and supporting documents to the Registrar of Companies (ROC):

Document	Purpose
Written consent of all partners	Confirms that every partner has approved the conversion.
Partners’ resolution	Records the LLP’s decision to convert into a Private Limited Company.
LLP Agreement	Establishes the LLP’s constitution and governing terms.
Statement of accounts	Certified by the LLP’s auditor and prepared not more than 15 days before filing Form URC-1.
Statement of assets and liabilities	Certified by a practising Chartered Accountant and prepared as of a date not more than 30 days before filing Form URC-1.
List of partners and proposed directors	Contains the details of all partners and the first directors of the proposed company.
Declarations and affidavits of first directors	Confirms that the proposed directors meet the requirements under the Companies Act, 2013.
Share allotment details	Specifies the shares to be allotted to the existing partners in the proposed company.
Certificate of Incorporation of the LLP	Confirms that the LLP is registered under the LLP Act, 2008.
Proof of statutory compliance	Evidence that the LLP has filed all mandatory returns, including Form 8 and Form 11.
NOCs from secured creditors	Confirms that secured creditors have no objection to the conversion. If there are no secured creditors, submit a declaration instead.
Approvals from sectoral regulators (if applicable)	Required for businesses regulated by authorities such as RBI, SEBI, or IRDAI.
Copies of Form URC-2 newspaper advertisements	Proves that the required public notice was published and the objection period was completed.
Proof of registered office	Includes the ownership document or rent agreement, recent utility bill, and owner’s NOC, where applicable.
Identity and address proof of proposed directors	PAN, Aadhaar, passport (for foreign nationals), and address proof.
Digital Signature Certificates (DSCs)	Required for the proposed directors to sign the electronic forms.
SPICe+ incorporation forms	Includes SPICe+, e-MOA (INC-33), e-AOA (INC-34), AGILE-PRO, and INC-9 for incorporating the new company.

What is the Step-by-Step Procedure to Convert LLP to a Private Limited Company?

You can convert an LLP to a Private Limited Company through a series of steps, starting with partner approval and director documentation. Here’s how it works:

Step 1: Obtain Approval from All Partners

Begin by obtaining the written consent of all partners. The LLP must pass a resolution approving the conversion and authorize one or more designated partners to sign and file the required forms. 

The conversion cannot proceed unless every partner agrees.

Step 2: Obtain DSC and DIN for All Proposed Directors

Ensure that all proposed directors have a valid DSC. 

If any proposed director does not have a Director Identification Number (DIN), they can obtain one through SPICe+. The proposed company must have at least two directors, including one resident director.

Every proposed director must obtain a Class 3 DSC to sign electronic forms on the MCA portal. They must also hold a DIN, applied for via Form DIR-3 or allotted through SPICe+ during incorporation. If you do not have a DSC yet, check out our step-by-step guide to registering a DSC on the MCA V3 portal.

Step 3: Apply for Name Approval via SPICe+ Part A

Apply for name approval through SPICe+ Part A. In most cases, businesses retain the LLP’s existing name by replacing “LLP” with “Private Limited”, subject to the MCA’s name availability guidelines.

Note: Reserved names are valid for 20 days. Complete the incorporation and URC-1 filing before the reservation expires. Otherwise, the name will lapse, and you may need to reapply and pay the ₹1,000 fee again. 

Step 4: Publish Newspaper Advertisement in Form URC-2

After reserving the name, publish Form URC-2 in an English newspaper and a vernacular newspaper circulating in the district where the LLP’s registered office is located. Also, send a copy of the notice to the Registrar. Wait 21 days for objections before proceeding.

Step 5: File Form URC-1 with the Registrar of Companies

Once the objection period ends, file Form URC-1 along with SPICe+ (Part B), e-MOA (INC-33), e-AOA (INC-34), AGILE-PRO, and INC-9 with the Registrar of Companies. Attach all the prescribed documents, including:

• The partners’ consent
• Certified financial statements
• LLP Agreement
• Creditor NOCs
• Form URC-2 advertisements
• Proof of statutory compliance

If an objection is raised during the 21-day notice period, resolve it before the Registrar proceeds with the conversion. Serve the URC-2 notice on the objecting party, usually a creditor, and either obtain a No Objection Certificate (NOC) or settle the claim. Then submit the objection and your response to the Registrar. The ROC will review both and proceed only after it is satisfied that the matter has been resolved. 

Step 6: Certificate of Incorporation

The Registrar of Companies reviews the application and supporting documents. If everything complies with the Companies Act, 2013, and the Companies (Authorized to Register) Rules, 2014, the ROC issues a Certificate of Incorporation with a new Corporate Identity Number (CIN). 

From that date, the LLP is recorded as dissolved, and the newly incorporated Private Limited Company succeeds to its business, assets, liabilities, rights, and obligations.

The entire conversion process typically takes 30 to 45 days, depending on the time taken for name approval, the mandatory 21-day objection period, and the ROC’s processing time.

Forms Required for Conversion of an LLP to a Private Limited Company

The conversion of an LLP to a Private Company requires filing multiple forms with the Registrar of Companies (ROC). The table below explains the purpose of each form:

Form	Purpose
SPICe+ Part A	Reserve the proposed company name.
Form URC-2	Publish a public notice in one English and one vernacular newspaper inviting objections to the proposed conversion.
Form URC-1	Register LLP as a Private Limited Company under Section 366 of the Companies Act, 2013.
SPICe+ Part B	Apply for the incorporation of a Private Limited Company and allotment of the CIN.
INC-33 (e-MOA)	File the electronic Memorandum of Association of the proposed company.
INC-34 (e-AOA)	File the electronic Articles of Association of the proposed company.
INC-9	Submit the declaration by the subscribers and first directors confirming compliance with the Companies Act, 2013.
AGILE-PRO	Apply for GST registration (optional), EPFO, ESIC, Professional Tax (where applicable), and bank account opening.

Government Fees and Other Costs of Converting an LLP into a Pvt Ltd Company

The cost of converting an LLP into a Private Limited Company starts from ₹20,000, reaching up to ₹80,000 for an authorized share capital of ₹1 lakh. 

Particulars	Estimated Cost	Paid To
Government fee (Form URC-1), based on authorized capital	₹2,000 – ₹15,000+	MCA
DSC (per director)	₹2,500	Licensed Certifying Authority
CA certification of the Statement of Assets and Liabilities	₹5,000–₹15,000	Chartered Accountant
Company Secretary / Professional Fees	₹10,000–₹25,000 + 18% GST	Company Secretary / CA / Professional Service Provider
MOA and AOA Drafting (if charged separately)	₹3,000–₹8,000	Professional Service Provider
Form URC-2 Newspaper Advertisement	₹2,000–₹10,000	Newspaper Publisher
Stamp Duty	Varies by state and authorized share capital	State Government

Post-Conversion Compliance After LLP to Private Limited Company Conversion

After the conversion of an LLP to a Private Limited Company, complete the following compliance requirements:

• Obtain a New PAN and TAN: Apply for a new PAN and TAN if they are not allotted through the incorporation process. The LLP’s PAN cannot be carried forward.
• Apply for GST Registration: Obtain a fresh GST registration, where applicable, cancel the LLP’s GSTIN, and transfer eligible ITC through Form GST ITC-02.
• Update Bank Accounts and Licenses: Update bank accounts, licenses, registrations, and permits, including IEC, FSSAI, MSME, and other applicable approvals.
• Update Business Records: Update contracts, invoices, letterheads, signboards, websites, and other records with the new company name and CIN. Inform customers, vendors, banks, and other stakeholders.
• Issue Share Certificates: Allot shares to the former LLP partners and issue share certificates as required.
• Comply with Company Law: Maintain statutory registers, conduct board meetings, complete the statutory audit, and file AOC-4, MGT-7/MGT-7A (as applicable), and DIR-3 KYC within the prescribed timelines.
• Update Property Records (if applicable): Pay the applicable stamp duty under state law and update property records if the LLP’s immovable property transfers to the company.

Common Mistakes to Avoid During LLP to Private Limited Company Conversion

Avoid these mistakes to prevent delays, rejection by the ROC, or the loss of tax benefits:

• Pending LLP Compliances: File all overdue Form 8, Form 11, and DIR-3 KYC (where applicable) before applying.
• Expired Financial Statements: Use an auditor-certified statement of accounts not older than 15 days and a CA-certified statement of assets and liabilities not older than 30 days.
• Missing Partner Consent: Obtain the written consent of all partners. Even one missing signature can invalidate the application.
• Skipping Form URC-2: Publish Form URC-2 in one English and one vernacular newspaper and complete the 21-day objection period before filing Form URC-1.
• Missing Creditor NOCs: Obtain NOCs from all secured creditors and required sectoral regulators before filing.
• Incorrect Share Allotment: Ensure the proposed shareholding reflects the partners’ capital contribution and profit-sharing ratio to retain tax neutrality.
• Breaching the Five-Year Lock-in: Former partners must collectively retain at least 50% voting power for five years to preserve the capital gains tax exemption.
• Ignoring Post-Conversion Compliances: Obtain a new PAN and GST registration (where applicable), update licenses and records, and complete annual company compliances.

The conversion of LLP to Pvt Ltd can unlock equity funding, ESOPs, tax advantages, and stronger credibility. To preserve tax-neutral treatment, meet the applicable conditions, including proportional share allotment and the 50% voting-power requirement for five years. Finally, update your PAN, TAN, GST, licenses, records, and annual compliance.

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