How to Convert a Private Limited Company into an LLP in 2026: Process & Eligibility
To convert a Private Limited Company to an LLP, reserve an LLP name, file the incorporation and conversion forms with the MCA, and obtain the Certificate of Registration. The process typically takes 10 to 15 working days, subject to MCA approval.
An LLP can be a good fit for small, profitable businesses that want lower compliance than what a Private Limited structure demands. It can also work well for professional firms and family-run businesses that do not plan to raise equity. However, businesses planning to raise funding or issue ESOPs may prefer to remain a company because an LLP cannot issue shares to investors.
A Private Limited to LLP conversion takes place under Schedule III, read with Section 56 of the LLP Act, 2008. It automatically transfers all assets, liabilities, rights, and obligations to the LLP. The conversion also remains tax-neutral if the company satisfies the prescribed conditions, historically under Section 47(xiiib) of the Income Tax Act, 1961, now carried into Section 70(1)(ze) of the Income Tax Act, 2025.
Key Takeaways
- The procedure for conversion of a Private Limited Company to an LLP typically takes 10 to 15 working days, subject to MCA approval.
- The process of changing a company into an LLP requires filing FiLLiP, Form 18, Form 9, Form 3, and Form 14 with the MCA.
- A Private Limited Company to LLP conversion requires all shareholders to become partners in the same proportion as their shareholding. The company must also have no subsisting charges and no pending ROC filings.
- The conversion remains tax-neutral under Section 47(xiiib) only if the company satisfies all the prescribed conditions, including the turnover and asset limits.
- Conversion to LLP structure suits businesses seeking operational flexibility and lower compliance, but allows partner contribution, ESOP issuance, or public listing.
Eligibility Criteria for Private Limited to LLP Conversion
Before starting a Private Limited to LLP conversion, one must meet certain legal conditions under the LLP Act, 2008:
- The shareholders become partners of the LLP, and their interests are reflected through the LLP’s contribution and profit-sharing arrangements.
- The company must have no subsisting security interest or charges on its assets.
- The company must obtain consent from all shareholders and creditors as required.
- It must have filed all pending ROC returns and financial statements to avoid outstanding compliance defaults.
Documents Required to Convert a Private Limited Company into an LLP
Use this document checklist for the conversion of a private company to LLP:
- Board Resolution approving the conversion.
- Written consent and NOCs from all shareholders and creditors.
- List of secured creditors with their NOCs.
- Certificate of Incorporation, MoA, and AoA.
- LLP Agreement.
- CA-certified statement of assets and liabilities.
- Latest audited balance sheet and profit & loss account.
- Latest Income Tax Return (ITR) acknowledgement.
- DSC and DIN of all designated partners.
- PAN and GST registration certificate (if applicable).
- PAN, Aadhaar/passport, and address proof of all designated partners.
How to Convert a Private Limited Company to LLP? (Step-by-Step Procedure)
Follow this procedure to convert a Pvt Ltd company to an LLP:
1. Pass Board Resolution
Hold a board meeting and pass a resolution approving the Private Limited to LLP conversion. Authorize a director to complete the process.
2. Reserve LLP Name
File Form RUN-LLP on the MCA portal to reserve your name before filing FiLLiP, locking it for 90 days. Alternatively, you can propose the name directly within FiLLiP, but a rejection there means re-filing the entire form.
Tip: Use a free LLP name search tool to check availability beforehand.
3. Obtain Digital Signatures and Partner Consent
Obtain a valid DSC for all designated partners. Take their consent to act as partners through Form 9.
Apply for a Director Identification Number (DIN) through the FiLLiP form for up to five designated partners during incorporation under the LLP (Second Amendment) Rules, 2022. For more than five designated partners, obtain a DIN separately through Form DIR-3 before appointment.
4. File Incorporation Form (FiLLiP)
File the FiLLiP form for LLP incorporation. Provide partner details, registered office address, and supporting documents.
5. File Conversion Application (Form 18)
Submit Form 18 along with FiLLiP to apply for the conversion of a Private Limited company to an LLP. Include details of shareholders, assets, liabilities, and approvals.
6. Certificate of Registration
The Registrar reviews the application and issues a Certificate of Registration. The company has converted into an LLP from this date.
7. Execute and File the LLP Agreement (Form 3)
Draft the LLP Agreement defining partner roles, profit-sharing ratios, capital contributions, decision rights, and exit terms. File the executed agreement in Form 3 with the MCA within 30 days of LLP incorporation.
Note: If you file Form 3 after the 30-day deadline, an additional fee applies under the LLP (Amendment) Rules, 2022. The fee is a multiple of the normal filing fee and increases with the delay. Non-small LLPs also pay a higher additional fee.
8. File Form 14 with the Registrar of Companies
Within 15 days from the exact date of registration/conversion, as shown on the LLP’s Certificate of Registration, file Form 14 with the Registrar of Companies (RoC) to notify it of the conversion. This intimation is required under the Third Schedule of the Limited Liability Partnership Act, 2008, which governs the conversion of a private company into an LLP, and enables the RoC to remove the company from the Register of Companies.
The complete conversion process from Pvt Ltd to LLP typically takes 10 to 15 working days, depending on document accuracy and MCA approval cycles.
Cost of Private Company to LLP Conversion
The cost of converting a Private Limited Company into an LLP depends primarily on the capital contribution and the stamp duty applicable in your state. The total cost includes MCA filing fees, stamp duty, and professional fees.
| Component | Approximate Cost (₹) |
| Name Reservation (RUN-LLP) | 200 |
| LLP Incorporation (FiLLiP) | 500–5,000 (based on capital contribution) |
| Conversion Application (Form 18) | Filed with FiLLiP (no separate fee) |
| DSC (per designated partner) | 2,500 |
| DIN (if applied separately through DIR-3) | ~100 per applicant |
| Stamp Duty on the LLP Agreement | Varies by state and capital contribution |
| Form 3 and Form 14 Filing | 100–400 (₹50–₹200 per form, based on capital contribution) |
| PAN and TAN | 150 |
| Professional Fees | 10,000–25,000 |
| Typical Total Cost | ₹15,000–₹35,000 |
Post-Conversion Compliances for LLPs
After completing the conversion, the LLP must complete certain legal, tax, and operational formalities:
- Obtain a new PAN and TAN in the name of the LLP, as the company’s PAN becomes invalid after conversion.
- Open a bank account in the LLP’s name and transition all business transactions to it.
- Amend GST registration, licenses, and statutory registrations to reflect the LLP structure.
- File the LLP Agreement with the Registrar within 30 days of incorporation.
- File Form 11 (Annual Return) and Form 8 (Statement of Accounts and Solvency) every year.
- Include a conversion statement on every invoice and official correspondence for 12 months from the date of conversion. Mention the former company’s name and registration number.
- File income tax returns as an LLP and comply with applicable tax provisions.
- Notify customers, vendors, banks, and other stakeholders about the conversion.
- Transfer and update existing contracts, registrations, and intellectual property in the LLP’s name.
What Actually Changes After Conversion?
Converting a Private Limited Company into an LLP changes how the business is structured, managed, and regulated. The key changes include:
- Governing law and structure: The entity moves from the Companies Act, 2013 to the LLP Act, 2008. Its constitutional document also changes from the MOA and AOA to the LLP Agreement.
- Shareholders become partners: Existing shareholders become partners in the LLP. Their ownership is represented through capital contribution and the agreed profit-sharing ratio instead of shares.
- Management structure changes: The board of directors is replaced by designated partners. They manage the LLP according to the terms of the LLP Agreement rather than through the company’s board and shareholder meeting framework.
- Lower ongoing compliance: The LLP does not have mandatory AGMs or quarterly board meetings and generally has fewer ROC filings. A statutory audit is required only when the prescribed turnover or contribution thresholds are crossed.
- Tax treatment changes: The LLP is taxed at 30%, while profits distributed to partners are not taxed again in their hands. This differs from the tax treatment of company dividends.
- Fundraising becomes more limited: An LLP cannot issue equity shares or ESOPs. This can make venture capital and institutional fundraising more difficult compared with a Private Limited Company.
- Name and legal identity change: The name changes from the “Private Limited” suffix to “LLP.” The business continues to have limited liability and perpetual succession.
What are the Tax Implications of Private Limited to LLP Conversion?
The conversion is tax-neutral under Section 47(xiiib) of the Income Tax Act only if all the prescribed conditions are met:
- The company’s total sales, turnover, or gross receipts did not exceed ₹60 lakh in any of the three financial years preceding the conversion.
- The total value of the company’s assets did not exceed ₹5 crore in any of those three preceding years.
- All shareholders become partners in the LLP, with their capital contribution and profit-sharing ratio in the same proportion as their shareholding.
- The shareholders’ combined profit-sharing ratio stays at least 50% for five years from the date of conversion.
- Shareholders receive no consideration other than capital contribution and profit share in the LLP.
- No accumulated profits are paid to any partner for three years after conversion.
Tax Treatment After Conversion
If these conditions are met, the conversion attracts no capital gains tax. If they are not, the following tax implications apply:
- LLPs pay income tax at 30% plus applicable surcharge and cess.
- The business transfer does not attract GST, but the LLP must obtain a new GST registration.
- MAT credit cannot be carried forward after conversion.
- Business losses and unabsorbed depreciation can be carried forward only if the conversion is tax-neutral.
If any condition is breached even after conversion, the tax exemption is reversed under Section 47A(4). The LLP also becomes liable for capital gains tax in the year of breach.
Benefits of Converting a Private Limited Company into an LLP
Converting a Private Limited Company into an LLP can reduce ongoing compliance while giving partners greater flexibility in managing and sharing profits. Key benefits include:
- Lower Compliance Burden: An LLP mainly files Form 11 and Form 8, instead of maintaining the broader board, shareholder, and ROC compliance framework required for a company.
- No Additional Tax on Profit Share: An LLP pays tax on its profits at the entity level, while a partner’s share of profit is generally exempt from tax in the partner’s hands.
- Audit Only Above Thresholds: An LLP generally needs an audit only when its turnover exceeds ₹40 lakh or partner contribution exceeds ₹25 lakh, helping smaller LLPs avoid mandatory audit costs.
- Flexible Management: The LLP Agreement can define profit sharing, partner responsibilities, decision-making, and management rights without the formal board structure of a company.
- No Cap on Partners: An LLP can have unlimited partners, making it easier to bring in additional business partners as the firm expands.
- Lower Ongoing Costs: Fewer statutory filings, simpler governance, and exemption from audit below the applicable thresholds can reduce recurring compliance expenses.
- Limited Liability: Partners generally receive limited liability protection, so personal assets remain separate from LLP liabilities, subject to applicable law and exceptions.
When Should You Not Convert from Private Limited to LLP?
Conversion to an LLP does not suit every business. Apply for Private Limited Company registration if you:
- Plan to raise external funding.
- Need ESOPs for employees.
- Cross LLP audit limits.
- Have pending charges or legal issues.
- Plan to bring foreign investment and want to meet approved FDI route.
- Plan an IPO or public listing.
