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

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

Running a private limited company sounds impressive, but many founders quietly struggle with its compliance load — mandatory board meetings, statutory audits regardless of turnover, ROC filings, and a fair amount of paperwork even when the business is small or has stopped actively raising external funding. If you have reached a stage where you no longer need the company structure's fundraising advantages but still want limited liability, converting to an LLP can be a smart, cost-saving move.

The good news is that the Companies Act, 2013 and the LLP Act, 2008 together provide a clear legal route for this conversion, and thousands of small and medium companies have made this switch successfully. But it is not a simple form-filling exercise — there are eligibility conditions, creditor consents, and tax implications you need to get right. This guide walks you through the entire journey in plain English.

What Does Converting a Private Limited Company into an LLP Mean

Converting a private limited company into an LLP means the company ceases to exist as a company and all its assets, liabilities, rights, and obligations are transferred to a newly formed LLP, which continues the same business. This is governed under the LLP Act, 2008, specifically the provisions and the Second Schedule dealing with conversion from a private company or an unlisted public company into an LLP.

Key features of this conversion:

• The company is dissolved without a formal winding-up process — the RoC removes its name from the register of companies once the LLP is formed.
• All assets and liabilities of the company automatically vest in the new LLP, so contracts, employees, and obligations generally continue without needing separate transfer deeds (unlike a proprietorship conversion).
• The shareholders of the company become partners of the LLP, typically in proportion to their shareholding, though the LLP Agreement can specify otherwise.
• This route is popular among small and medium businesses looking to reduce compliance costs while keeping the benefit of limited liability and a separate legal identity.

Why Convert Your Private Limited Company to an LLP

Here is why many founders and business owners choose this route:

• Lower ongoing compliance: LLPs are not required to hold a fixed number of board meetings, do not need a company secretary in most cases, and the statutory audit requirement kicks in only above a specified turnover or contribution threshold, unlike companies where audit is mandatory regardless of size.
• No Dividend Distribution Tax hassle: Profit withdrawal by partners in an LLP does not attract the same dividend-related tax treatment that a company's dividend distribution does.
• Simpler decision-making: LLP Agreements can be structured flexibly, without the rigid requirements of the Companies Act around board resolutions and shareholder approvals for many routine matters.
• Lower cost of maintenance: No requirement for a minimum number of directors' meetings, simpler annual filings (Form 8 and Form 11 versus multiple ROC forms for a company), and generally lower professional fees for yearly compliance.
• Retained limited liability: You do not lose the core benefit of limited liability protection that made you incorporate a company in the first place.
• Useful when external fundraising is no longer a priority: If your company does not plan to raise equity funding from investors (who usually prefer the company structure for share issuance and ESOPs), an LLP can be a leaner, more efficient vehicle going forward.

Eligibility and Conditions

Conversion of a private limited company into an LLP is subject to specific conditions under the LLP Act, 2008. Broadly, you should check:

• The company should not have any secured creditors, or if it does, the consent of all secured creditors must be obtained before conversion.
• All shareholders of the company must become partners of the LLP upon conversion — there cannot be a shareholder left out, and no one else can be added as a partner at the point of conversion who wasn't already a shareholder.
• The company must be up to date with its statutory filings — annual returns and financial statements filed with the RoC should be current.
• The company should have no pending or outstanding statutory dues, such as income tax, and ideally no pending prosecutions or regulatory actions that could complicate the conversion.
• Some categories of companies (for instance, certain companies with specific regulatory status, or those that have accepted deposits from the public not yet repaid) may face additional restrictions — check applicability to your specific case.
• A No Objection Certificate (NOC) from the Income Tax Department is generally advisable, and depending on your case, may be required to demonstrate there are no pending tax liabilities.
• The company's latest financial statements and net worth are used as reference points during the conversion filing, so these should be accurate and audited.
• If the company holds any immovable property, licenses, or registrations, be prepared for these to require intimation or re-registration in the LLP's name post-conversion, even though vesting is largely automatic under law.

Documents Required

• Certificate of Incorporation and Memorandum & Articles of Association of the company
• PAN card of the company and of all shareholders/proposed partners
• Latest audited financial statements (Balance Sheet and Profit & Loss Account)
• List of all shareholders with their shareholding pattern, to determine profit-sharing ratio as partners
• List of secured creditors, if any, along with their written consent to the conversion
• Income Tax Returns filed by the company for recent years
• NOC from the Income Tax Department, wherever applicable
• Statement of assets and liabilities of the company, certified by a Chartered Accountant, not older than the prescribed period before filing
• Details and proof of registered office (ownership or rental proof, NOC from owner, and recent utility bill)
• Digital Signature Certificates (DSC) of proposed designated partners
• DPIN/DIN of proposed designated partners
• Board resolution approving the proposed conversion into LLP
• Consent of all shareholders/partners to the conversion and to the LLP Agreement
• Draft LLP Agreement specifying capital contribution, profit-sharing ratio (usually mirroring the shareholding pattern), and partner roles
• Copy of latest company filings such as annual return and financial statements filed with the RoC (to demonstrate compliance is current)

Step-by-Step Process and MCA Forms

1. Hold a Board Meeting to approve the proposal to convert the company into an LLP and to authorise a director to proceed with filings.
2. Obtain consent of shareholders, typically through a special resolution, approving the conversion.
3. Obtain consent of secured creditors, if any, in writing — this is a mandatory pre-condition under the LLP Act.
4. Apply for Digital Signature Certificates and DPIN for designated partners who do not already have one.
5. Reserve a name for the LLP using the RUN-LLP service, ensuring the proposed name is available and, where desired, consistent with the existing company's brand name.
6. File Form 17 (Application and statement for conversion of a firm/private company/unlisted public company into LLP) along with the required attachments — statement of consent of shareholders, secured creditors' consent, and the company's latest financial statements.
7. File incorporation Form FiLLiP, marking it as a conversion from a private company, along with subscriber details, registered office proof, and the draft LLP Agreement.
8. On approval, the Registrar issues a Certificate of Incorporation confirming the LLP's registration and noting the conversion from the company.
9. File LLP Form 3 for registering the particulars of the LLP Agreement within the prescribed timeline from incorporation.
10. File Form 14 with the RoC, intimating the concerned Registrar of Companies (where the company was originally registered) about the conversion, within the prescribed period of incorporation of the LLP.
11. Inform all stakeholders — banks, vendors, clients, licensing authorities, and GST department — about the conversion, and update PAN, TAN, GST registration, and other records to reflect the LLP.
12. Surrender or update statutory registrations held by the erstwhile company (GST, import-export code, trademarks, MSME/Udyam, shop and establishment) in the LLP's name.

Cost and Fees in 2026

• Government filing fees for Form 17 and FiLLiP are based on the company's capital or the LLP's proposed contribution slab — verify the current fee schedule on the MCA portal before filing, as these are revised periodically.
• Stamp duty on the LLP Agreement is state-specific and depends on the capital contribution — verify the current rate for your state.
• Professional fees for CA/CS certification of financial statements, drafting the LLP Agreement, obtaining creditor consents, and handling the RoC filings will vary based on case complexity, number of creditors, and the size of the company.
• If an NOC from the Income Tax Department is required in your case, factor in the time and any professional fees associated with obtaining it.
• Additional costs may apply for updating GST, trademarks, and other licenses post-conversion.

Since government fees, stamp duty, and professional charges vary and are updated from time to time, always verify the current rate before finalising your budget, or get an itemised, all-inclusive quote from Legal Suvidha upfront.

Timeline

• Board and shareholder approvals, creditor consent collection: 1–3 weeks, depending on the number of creditors and how quickly they respond
• DSC, DPIN, and name reservation: 3–5 working days
• Filing and approval of Form 17 and FiLLiP: 2–4 weeks, subject to RoC scrutiny and queries raised
• Filing of Form 3 and Form 14 post-incorporation: within the statutory timeline after the Certificate of Incorporation is issued
• Post-conversion updates to GST, bank accounts, and licenses: 2–4 weeks

In total, most private companies can expect the full conversion process to take 6 to 10 weeks, and sometimes longer if there are multiple secured creditors or pending regulatory filings that need to be cleared first.

What Changes After Conversion

• Legal continuity: All assets, liabilities, contracts, and pending proceedings of the company automatically vest in the LLP by operation of law, so business continuity is generally smoother than in a proprietorship conversion.
• Taxation: The LLP is taxed as a separate entity under the Income Tax Act, and certain conversions from a private company to an LLP can qualify for capital gains tax exemption, provided specific conditions are met — such as the total sales/turnover or gross receipts of the company not exceeding the prescribed threshold in any of the preceding years, all shareholders becoming partners in the same proportion as their shareholding, no consideration other than the share of profit and capital contribution being paid to partners for at least the prescribed lock-in period, and the accumulated profits of the company not being distributed to partners for a specified period after conversion. These conditions are technical and strictly enforced, so please verify applicability with a tax professional before assuming the exemption applies to your case.
• Compliance load: You move from company-level compliance (board meetings, mandatory annual audit regardless of size, multiple ROC forms) to LLP-level compliance (Form 8 and Form 11 annually, audit only above a prescribed turnover/contribution threshold).
• Loss of company-specific benefits: Certain benefits like ESOP issuance, easy equity fundraising, and some tax incentives available only to companies will no longer be available once you convert to an LLP.
• Carry-forward of losses and unabsorbed depreciation: These may be available to the successor LLP subject to conditions under the Income Tax Act, but this is a technical area — get this checked carefully with your CA before relying on it.
• Bank and vendor documentation: Even though vesting is automatic in law, banks typically require you to update loan agreements, current accounts, and security documents to reflect the new LLP entity.

Common Mistakes to Avoid

• Proceeding with conversion without obtaining written consent from all secured creditors, which is a mandatory condition and a common reason for rejection.
• Not verifying that all shareholders are becoming partners in the LLP, which is a strict requirement under the Second Schedule of the LLP Act.
• Assuming the capital gains tax exemption automatically applies without checking whether your company meets the turnover threshold and other conditions.
• Distributing accumulated profits to partners soon after conversion, which can jeopardize the tax exemption if the lock-in condition is violated.
• Ignoring pending litigations or regulatory notices against the company, assuming they disappear on conversion — they do not, and continue against the successor LLP.
• Forgetting to file Form 14 with the original RoC within the prescribed time after incorporation of the LLP.
• Not updating GST registration and other licenses promptly, leading to compliance gaps or notices addressed to a now-dissolved company.
• Choosing to convert without professional guidance to check eligibility conditions, resulting in RoC rejection after significant time and money has already been spent.

FAQ

Can any private limited company convert into an LLP?

Most private companies can, provided they meet the eligibility conditions under the LLP Act, 2008 — mainly having no unresolved secured creditor objections, being up to date with statutory filings, and having all shareholders willing to become partners. Certain regulated or specific categories of companies may face restrictions, so it is best to verify your specific eligibility.

Do all directors automatically become designated partners of the LLP?

Not automatically — while all shareholders must become partners, the designated partners (who bear specific compliance responsibilities) need to be identified and must obtain DPIN and DSC. Existing directors are commonly chosen as designated partners, but this is a decision made during the conversion process.

Is there a tax exemption available on this conversion?

Yes, subject to conditions — including turnover thresholds, all shareholders becoming partners in the same proportion, and restrictions on profit distribution and transfer of partner rights for a specified period after conversion. Since these conditions are strictly interpreted, please get your eligibility confirmed by a tax professional before proceeding.

What happens to the company's pending contracts and litigation?

They automatically vest in the successor LLP by operation of law, since the conversion does not involve winding up the company — the LLP simply steps into its shoes for all purposes.

Do I need consent from all creditors, or only secured creditors?

The LLP Act specifically requires the consent of secured creditors before the conversion can proceed. While unsecured creditors are not legally required to consent, it is good practice to inform major unsecured creditors and vendors as well, to maintain trust and avoid disputes later.

How long does the whole conversion process take?

Typically 6 to 10 weeks from the board resolution to a fully incorporated LLP with updated licenses and bank accounts, though this can extend if there are multiple secured creditors or if the RoC raises queries during scrutiny.

Will my company's PAN and GST number continue after conversion?

No. The LLP is a new legal entity and will need its own PAN, TAN, and GST registration. The company's registrations should be surrendered or transitioned once the LLP's registrations are active, to avoid duplicate or conflicting compliance.

Can a company with accumulated losses still convert to an LLP?

Generally yes, and there are provisions that may allow carry-forward of certain losses and unabsorbed depreciation to the LLP under specific conditions of the Income Tax Act, but this needs a careful, case-by-case review with a tax expert since the rules are technical.

How Legal Suvidha Makes This Effortless

This is exactly the kind of process where one wrong document, a mismatched detail, or a missed deadline turns into a rejection, a resubmission, or a running penalty. Legal Suvidha handles the whole thing end-to-end so you can focus on your business.

• Fixed, all-inclusive price quoted upfront — professional fee plus government fee, itemised, with no hidden charges appearing later.
• A dedicated Chartered Accountant / Company Secretary who owns your case from the first call to the final certificate.
• Proactive updates and deadline alerts at every stage — we do not disappear after payment.
• Trusted by 10,000+ founders with a 4.9/5 rating and a multi-disciplinary team of CAs, CSs and lawyers.

Talk to a Legal Suvidha expert today for a free consultation and an exact, transparent quote on WhatsApp — and get it done right the first time.