How to Convert a Private Limited Company into an LLP (2026)

Key Takeaways

• The LLP Act, 2008 governs the conversion, not the Companies Act, 2013.
• A company with a subsisting charge on its assets must clear it and file Form CHG-4 before applying.
• After registration, the LLP files Form 14 with the ROC within 15 days and its LLP agreement in Form 3 within 30 days.
• Existing contracts, employees, licenses, and pending proceedings continue in the LLP’s name, with no separate transfer deeds.
• The capital gains exemption applies only if turnover stayed within ₹60 lakh and total assets within ₹5 crore in each of the three preceding years.
• The LLP gets a new PAN and GSTIN, and unused input tax credit moves through Form GST ITC-02.

Why Convert From a Private Limited Company to LLP?

Converting to an LLP can reduce the Pvt Ltd Company's annual filing and governance requirements while retaining limited liability protection. 

The table below compares the key differences between a Private Limited Company and an LLP after conversion:

Area	Private Limited Company	LLP
Annual ROC filings	AOC-4 and MGT-7/7A	Form 8 and Form 11
Statutory audit	Mandatory for every company	Only if turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh
Meetings	At least four board meetings a year (two for small companies), plus an AGM	No statutory meetings; the LLP agreement sets decision-making
Tax on profits	22% under Section 200 (optional regime; 25.17% effective)	30% plus surcharge and cess
Profit distribution	Dividends taxed again in shareholders’ hands	Partners’ profit share exempt under Schedule III, S.No 2
Raising equity	Can issue shares to investors and offer ESOPs	Cannot issue shares; FDI only in sectors open to 100% FDI under the automatic route
Number of owners	Up to 200 members	No maximum number of partners

Note: Businesses planning to raise venture capital, offer ESOPs, or accept foreign investment in restricted sectors should apply for Private Limited Company registration. This is because an LLP cannot issue shares. 

When Should You Not Convert a Private Limited Company to an LLP?

Converting to an LLP may not suit companies with certain funding, tax, or operational needs. Retaining the Private Limited Company structure may be more practical if your business:

• Plans to raise equity: An LLP cannot issue shares, making it unsuitable for angel or venture capital investment and ESOPs. An LLP that later needs equity funding can follow the steps to convert an LLP to a private limited company.
• Has foreign investors in a restricted sector: An LLP can accept FDI only in sectors that allow 100% FDI under the automatic route, without FDI-linked performance conditions.
• Exceeds the tax exemption limits: If the company exceeds the turnover or asset limits discussed below, the conversion will not qualify for the capital gains tax exemption.
• Needs to distribute accumulated profits: The tax exemption requires the LLP not to pay partners any amount from the company's accumulated profits for three years after conversion.
• Has unused MAT credit: The company's unused Minimum Alternate Tax (MAT) credit does not transfer to the LLP and is lost on conversion.
• Cannot clear secured loans: A subsisting charge on the company's assets prevents conversion until the loan is repaid or the lender releases the charge.

If you are unsure which structure suits your business, read our detailed blog on the difference between Private Limited Company and LLP.

Who Can Apply for Private Limited to LLP Conversion?

The Third Schedule to the LLP Act, 2008, sets out the main eligibility conditions for converting a Private Limited Company into an LLP. The company must meet these requirements, along with the LLP Act's rules on partners and designated partners, including:

• No outstanding security interests: There must be no subsisting charge on the company's assets when it applies for conversion. It must repay the secured loan or obtain a release of the charge and file Form CHG-4 to record its satisfaction.
• All shareholders become partners: Every existing shareholder must become a partner in the LLP. No person who is not a shareholder can join as a partner at the time of conversion.
• At least two designated partners: The LLP must have at least two designated partners, with at least one residing in India for 120 days or more during the financial year. A corporate shareholder can nominate an individual to serve as its designated partner.
• At least two partners: An LLP must have at least two partners, so a One Person Company (OPC) cannot convert directly. It must first convert into a Private Limited Company with at least two members. Conversely, a single-owner company that cannot bring in a second partner may instead consider the conversion of a private company into an OPC.
• Foreign investment eligibility: If the company has foreign shareholders, its sector must allow 100% FDI under the automatic route, without any FDI-linked performance conditions.

Note: The ROC also expects the company to have filed its pending annual returns and financial statements before approving Form 18.

Board Resolution for Conversion of a Private Limited Company into an LLP

The LLP Act does not prescribe a specific format for the board resolution approving the conversion of a Private Limited Company into an LLP. However, the resolution should authorize the key decisions and filings involved in the process and cover:

Matter	What the Board Must Approve	Purpose
Conversion	Conversion under Section 56 and the Third Schedule of the LLP Act, 2008	Formally authorizes the change in business structure
LLP name	Proposed names and application through RUN-LLP	Allows the company to reserve an LLP name
Designated partners	Names of the proposed designated partners	Identifies who will manage the LLP
Financial statements	Statement of assets and liabilities certified by the company's auditor	Records the company's financial position before conversion
Capital contribution and profit sharing	Proposed contribution and profit-sharing ratios in proportion to existing shareholding	Supports eligibility for the capital gains exemption
Filing authority	A named director to sign and file Forms FiLLiP, 18, and obtain the necessary consents from creditors and authorities. Form 14 is filed later by a designated partner of the LLP.	Authorizes the director to complete the conversion formalities

Separately, all shareholders must sign a statement consenting to the conversion. This statement must include the company's name, registration number, and date of incorporation. It is this shareholder statement, rather than the board resolution, that the Third Schedule requires to be filed with Form 18.

Prerequisites for Converting a Private Limited Company into an LLP

Use this checklist for conversion of a Private Company to an LLP before filing Form 18:

• Clear every charge on the company’s assets and file Form CHG-4 for each satisfaction.
• File any pending AOC-4, MGT-7/7A, and income tax returns.
• Check turnover and total assets for the last three years against the ₹60 lakh and ₹5 crore limits for the capital gains exemption.
• Obtain Class 3 DSCs for all proposed designated partners.
• Pass the board resolution and collect the shareholders’ signed consent statement.
• Get the statement of assets and liabilities certified by the company’s auditor.
• Prepare a list of creditors and obtain their consent to the conversion.
• Arrange the statement of partners, identifying all proposed partners and their details.
• Keep the latest income tax return acknowledgment, latest audited financial statements, and the company's MOA and AOA ready.
• Obtain a CA's certificate confirming that the company is not engaged in NBFC activities and will not undertake them after conversion.
• Get the directors' declaration confirming compliance with the conversion requirements.
• Arrange proof of the LLP's registered office, a recent utility bill, and the owner's NOC, where applicable.
• Obtain approval from any authority whose license or approval the company holds, where required.
• Draft the LLP agreement so it is ready to file after registration.

How to Convert a Private Limited Company to LLP? Step-by-Step Process

You can convert a Private Limited Company to an LLP through the MCA V3 portal by following these steps:

Step 1: Reserve the LLP Name Through RUN-LLP

Apply for up to two proposed names through RUN-LLP and pay the ₹200 fee. An approved name remains reserved for three months. 

You can also retain the company's existing brand name, replacing “Private Limited” with “LLP.”

Tip: Use a free LLP name search tool to check availability beforehand and reduce RUN-LLP application rejections or resubmissions.

Step 2: File FiLLiP With Form 18

File the company’s conversion application through the FiLLiP form, with Form 18 as a linked form. To do this, select the option for conversion from a Private Company and attach the required supporting documents. The filing includes:

• Form 9: Consent of the proposed designated partners, generated through FiLLiP.
• Form 18: Shareholders' signed consent statement, the auditor-certified statement of assets and liabilities, and the latest income tax return acknowledgment.

A practicing CA, CS, or CMA must certify the filing before submission.

Step 3: Receive the Certificate of Registration

Once the Registrar reviews and approves the application, the LLP receives its Certificate of Incorporation in Form 19, along with its LLP Identification Number (LLPIN). The same filing also provides for the allotment of its PAN and TAN.

This certificate marks the legal completion of the conversion. From the registration date stated on it, the Private Limited Company is deemed dissolved and removed from the ROC's records.

Step 4: Notify the ROC Through Form 14

The Third Schedule requires the LLP to inform the ROC of the conversion within 15 days of registration. It does this by filing Form 14, attaching:

• The Certificate of Registration
• A copy of the FiLLiP filing

Step 5: File the LLP Agreement in Form 3 Within 30 Days

With the LLP registered, the partners must formalize how they will run the business. Prepare the LLP agreement and file it in Form 3 within 30 days of registration.

If the LLP intends to claim the capital gains exemption, the agreement must also reflect the required capital contribution and profit-sharing ratios. These must be proportionate to the partners' shareholding in the former company.

Timeline to Convert a Private Limited Company into an LLP

The Private Limited Company to LLP conversion process usually takes 3-5 weeks, provided the company has cleared its outstanding charges and completed pending ROC filings. 

Here’s how long each stage takes:

Stage	Estimated Time
Clearing charges and pending filings	Varies with the company’s filing history
DSCs for designated partners	1 to 2 working days
RUN-LLP name approval	2 to 3 working days
FiLLiP and Form 18 approval	7 to 15 working days
Form 14	Within 15 days of registration
Form 3	Within 30 days of registration
New GST registration	Up to 7 working days (up to 30 days with physical verification)

Note: Delays in clearing outstanding charges or completing pending ROC filings may extend the overall conversion timeline.

Costs of Converting a Private Limited Company into an LLP

The cost of converting a Private Limited Company into an LLP typically ranges from about ₹21,000 to ₹97,000. This includes government fees, DSCs for two designated partners, stamp duty on the LLP agreement, and professional fees. The cost breakdown is as follows:

Fee Component	Indicative Cost (2026)
DSC for each designated partner	About ₹2,500 each
RUN-LLP name reservation	₹200
FiLLiP filing fee (including conversion)	₹500 to ₹5,000, based on contribution
Form 18 filing fee	₹50 to ₹600, based on contribution
Form 14 filing fee	₹50 to ₹600, based on contribution
Stamp duty on LLP agreement	Varies by state
Professional fees	Depends on the company's size and filing history

Beyond these costs, the LLP must pay a Form 3 filing fee of ₹50 to ₹600 to register its LLP agreement within 30 days of incorporation.

Note: Filing fees depend mainly on the LLP's total contribution, while stamp duty varies by state.

Conversion of Private Limited Company to LLP: Tax Implications

The tax treatment of a Private Limited Company converted into an LLP depends largely on whether the conversion qualifies for the exemptions and benefits available under the Income Tax Act, 2025. 

Here’s how the conversion affects capital gains, business losses, MAT credit, and GST:

• Capital gains tax exemption: Section 70(1)(ze) (formerly Section 47(xiiib)) exempts the transfer of the company's assets to the LLP and the shareholders' transfer of shares if:
  • All company assets and liabilities transfer to the LLP.
  • All shareholders become partners, with capital and profit-sharing ratios in proportion to their shareholding.
  • Shareholders receive no consideration beyond their capital contribution and profit share.
  • Former shareholders retain at least 50% of the LLP's profit share for five years.
  • Turnover and total assets did not exceed ₹60 lakh and ₹5 crore, respectively, in any of the preceding three financial years.
  • The LLP makes no payment from accumulated profits to partners for three years.
• Breach of exemption conditions: If any condition under Section 70(1)(ze) is breached after conversion, Section 71(3) (replacing Section 47A(4)) makes the previously exempt capital gain taxable in the year of the breach. The tax is charged to the successor LLP or a shareholder of the predecessor company, as applicable.
• Carry-forward of business losses: Under Section 116(10) (formerly Section 72A(6A)), the LLP can carry forward the company's unabsorbed business losses and depreciation if the conversion qualifies for the exemption. If any Section 70(1)(ze) condition is later breached, Section 116(11) treats the losses already set off as the LLP's income in the year of the breach. Section 116(12) limits the carry-forward to eight tax years from the tax year in which the loss was first computed for the original predecessor. 
• MAT credit: Any unused Minimum Alternate Tax (MAT) credit of the company does not transfer to the LLP after conversion.
• GST registration and input tax credit: Since the LLP receives a new PAN, it must obtain a fresh GST registration. The company can transfer its unused input tax credit to the LLP by filing Form GST ITC-02, subject to the applicable conditions.

What Changes After a Private Company Converts to an LLP?

Under the Third Schedule to the LLP Act, the business transfers to the LLP by law, without separate transfer deeds or fresh agreements. After conversion:

• Assets and liabilities: All company property, rights, and liabilities automatically vest in the LLP on the registration date. The LLP must also notify the relevant authorities to update records for registered assets, such as land, vehicles, and trademarks.
• Contracts and employees: Existing contracts continue with the LLP as the party, and employees continue with the LLP as their employer.
• Legal proceedings: Pending cases, orders, and judgments involving the company continue by or against the LLP.
• Licenses and approvals: Existing licenses and approvals carry over, subject to the laws governing them. Notify each issuing authority.
• Correspondence: For 12 months, starting within 14 days of registration, the LLP must state on its letters, invoices, and official documents that it was converted from the company, along with the former company name and registration number. Non-compliance attracts a penalty of ₹10,000 on the LLP and each partner, plus ₹100 per day while the default continues, up to ₹1 lakh for the LLP and ₹50,000 for each partner.
• Bank accounts and records: Update bank accounts, invoices, websites, and vendor records with the LLP's name, PAN, and LLPIN.
• Annual compliance: File Form 11 by May 30 and Form 8 by October 30 each year. An LLP audit is required only if turnover exceeds ₹40 lakh or partner contributions exceed ₹25 lakh. See our guide on the annual compliance requirements of an LLP for the full filing calendar.

Laws Governing the Conversion of a Private Limited Company into an LLP

The conversion of a Private Limited Company into an LLP is governed by several laws, each addressing specific aspects of the process. These include:

Law	What It Covers
Section 56 and Third Schedule, LLP Act, 2008	Eligibility, the shareholders’ statement, and the effects of conversion on assets, contracts, employees, and legal proceedings
Section 58, LLP Act, 2008	Registration of the conversion and the certificate issued by the Registrar
LLP Rules, 2009	Forms FiLLiP, 18, 14, and 3, along with the applicable filing fees
Companies Act, 2013	Does not provide a separate conversion procedure. The company is removed from the ROC's records after conversion, while Section 366 covers the reverse route of registering an entity as a company
Section 70(1)(ze), Income Tax Act, 2025	Capital gains exemption on conversion (formerly Section 47(xiiib))
Section 116(10) and 116(12), Income Tax Act, 2025	Carry-forward of the company's losses, subject to an eight-tax-year limit from the year in which the loss was first computed
Section 18(3), CGST Act, 2017	Transfer of unused input tax credit to the LLP through Form GST ITC-02
Rule 41, CGST Rules, 2017	Requires a certificate from a practicing Chartered Accountant or Cost Accountant, filed with Form GST ITC-02, confirming that the transfer of business includes a specific provision for the transfer of liabilities.

Conclusion

Before converting, review the company's turnover and total assets for each of the preceding three years. If either exceeded the ₹60 lakh turnover limit or the ₹5 crore asset limit in any one year, the company will not qualify for the capital gains tax exemption. Assessing these limits early can help avoid an unexpected tax liability after conversion.

Once registered, the LLP must follow its own compliance calendar, including Form 3, Form 11, and Form 8. Get in touch with RegisterKaro to check whether LLP incorporation suits your plans and simplify MCA filings from RUN-LLP name reservation to Form 14.