Mr. A and Ms. B, two ambitious professionals, began their journey by offering consultancy services through a small setup. As their business grew and their ambitions expanded, they decided to formalize their operations by incorporating a Private Limited Company under the name AB Consulting Services Private Limited.

The primary reason for incorporation was their belief that, sooner or later, they might need to raise capital from investors to scale up operations. However, after a year of running the company, they realised that fundraising was not an immediate requirement. Instead, what their business really needed at this stage was more groundwork, strategic planning, and consolidation for growth.

While reviewing their options, they also noticed the increasing compliance burden of running a private limited company—board meetings, annual returns, audits, and other statutory filings. This compliance cost was proving to be more than what the business needed in its current phase.

At this point, they consulted a Professional for advice. After carefully assessing their requirements, the Professional recommended:

“Since you don’t need external capital at this stage, and you are looking for ease of compliance, the most viable option is to convert your private limited company into a Limited Liability Partnership (LLP).”

The reasoning was simple:

• An LLP is a separate legal entity just like a company.
• It provides limited liability protection to its partners.
• The compliance and filing requirements are much lighter compared to a company.
• Since fundraising is not a current priority, the LLP structure is perfectly suited for their present stage of business.

Convinced with this approach, Mr. A and Ms. B decided to move forward with the conversion. With the guidance of the Professional, they initiated the necessary steps for converting their company into an LLP, and the process unfolded as follows:

Step 1: Board Meeting

Mr. A, being one of the directors, issued a Notice of Board Meeting along with the agenda items including conversion of the company into an LLP and approval of notice for an Extraordinary General Meeting (EGM).

During the Board Meeting, the directors deliberated on the proposal, approved the idea of conversion, and recommended the matter to shareholders by passing a board resolution.

Step 2: Extraordinary General Meeting (EGM)

A Notice of EGM was sent to all shareholders through email, clearly stating the agenda of conversion into LLP.

At the EGM, the shareholders unanimously approved the proposal and passed a Special Resolution for conversion.

In compliance with the provisions of the Companies Act 2013, the company filed Form MGT-14 within 30 days of passing the resolution.

Step 3: Due Diligence

Before proceeding with the actual conversion application, the following checks were ensured:

• Consent was obtained from all shareholders to convert the company into an LLP.
• All proposed partners of the LLP were the same as the shareholders of the company.
• No security interest existed on the company’s assets.
• All statutory filings, including the latest balance sheet and annual returns, were up to date.

Step 4: Name Reservation

Mr. A initiated the process by applying for reservation of the proposed LLP’s name through the RUN-LLP (Reserve Unique Name – LLP) service on the MCA portal. It is worth noting that name reservation can alternatively be applied for directly in Form FiLLiP at the time of incorporation.

Step 5: Filing Conversion Forms

1. Form FiLLiP (Form for incorporation of LLP) was filed with all supporting documents as per Section 11 of the LLP Act, 2008 read with LLP Rules, 2009.
   
2. Form 18 (Application and Statement for Conversion of a Private Company / Unlisted Public Company into LLP), as prescribed under Section 56 and Schedule III of the LLP Act, 2008, was filed simultaneously with Form FiLLiP. Since Form 18 is not directly visible on the MCA portal, it can be accessed through the following path:

MCA Home > MCA Services > Company e-Filing > LLP Forms Download > FiLLiP- Form-18 

Form 18 required answering certain compliance-related questions, such as:

• Whether there are any pending prosecutions or proceedings against the company.
• Whether any earlier application for conversion was rejected.
• Whether any order or judgment by Court/Tribunal is subsisting.
• Whether the company is engaged in financial activities.

Mandatory Attachments with Form 18

• Statement of Assets and Liabilities of the company, certified by the auditor (not older than 15 days).
• List of all secured creditors with their consent, if any.
• Approval from regulatory bodies, if applicable.
• Copy of acknowledgement of the latest Income Tax Return.
• Auditor’s Certificate.

Step 6: Fresh Certificate of Incorporation

Upon verification of documents and forms, the Registrar of Companies (ROC) issued a Fresh Certificate of Incorporation for the newly formed LLP.

Thus, AB Consulting Services Private Limited successfully transitioned into AB Consulting Services LLP. The new structure allowed Mr. A and Ms. B to focus on expanding their business with reduced compliance and greater operational flexibility.

Step 7: Draft LLP Agreement and File Form 3

After obtaining the Certificate of Incorporation, Mr. A and Ms. B drafted and executed the LLP Agreement on appropriate stamp paper, duly paying the applicable stamp duty (1% of the capital contribution, with a minimum of ₹500 and a maximum of ₹15,000). The agreement, outlining the mutual rights and duties of the partners, was then filed with the Registrar in LLP Form-3 within 30 days from the date of incorporation.

Other Consideration

It is important to note that the process of conversion from a private limited company into an LLP is not limited to compliance under the LLP Act, 2008 read with LLP Rules, 2009. In practice, there are also tax implications (such as treatment of capital gains, carry forward of losses, MAT credit, and stamp duty aspects) as well as intellectual property considerations (like ensuring that the company’s trademark, brand name, or other IP assets are duly protected and transferred). However, this article has been intentionally restricted to a compliance-focused discussion under the LLP Act read with applicable rules, keeping the narrative practical and concise.

Conclusion

The journey of AB Consulting Services from a Private Limited Company to an LLP highlights a practical scenario faced by many growing businesses in India. While a private limited structure offers advantages in terms of scalability and access to investors, it also brings with it a relatively higher compliance burden and cost. For Mr. A and Ms. B, converting into an LLP struck the right balance—retaining the benefit of limited liability and separate legal entity status, while easing compliance and providing flexibility for day-to-day operations.

From a compliance perspective, this case demonstrates that entrepreneurs must carefully evaluate their immediate and future business needs before choosing or transitioning to a particular structure. The LLP framework not only reduced their regulatory obligations but also allowed them to focus resources on strategy, planning, and growth, rather than on routine statutory filings.

Ultimately, the conversion was not just a procedural shift but a strategic decision aligning the business structure with the company’s current priorities and long-term vision.