Bangalore ChapterThe ICSI Fully Day Seminar on LLP

Bangalore Chapter-The ICSI, Fully Day Seminar on LLP Act, 2008 on 23 -11 -2013 Conversion of Companies and Partnership Firms into LLP By CS Thirupal Gorige, Practising Company Secretary

Conversion of Companies/Firm into LLP- Practical Aspects • • Pre- Requisites/ Conditions Procedure Post- Conversion activities Taxation advantages

Conversion of Companies into LLPPre- Requisites/ Conditions From Company • No-Pending of E-forms filed by Com. • No Charges should subsist at MCA site • Company should be having share capital • Section 25 Com. are not allowed • One financial year must over • Update filing of all forms and returns • Update - income tax filings

Conversion of Companies into LLPPre- Requisites/ Conditions From Director/shareholders • At DIN -residential status must (For DP) • DIN –PAN integration (For DP) • PAN/ passport (partners) • PAN containing abbreviation are not allowed

Conversion of Companies into LLPProcedure From Company • Board Resolution • Filing of form 1 –Name availability • Filing of form 2 - With subscriber sheet and Proof of address • Filing of form 18 • Filing of form 3 • Filing of form 14

Conversion of Companies into LLP- Procedure Things to be ensured before or at time of filing of form 18 (i) Individual Consent/statement (as per Part-B of form 18) from shareholders (ii) Disinterested Shareholders, if any, to be provided exit option, (share acquisition/ transfer) otherwise no conversion

Conversion of Companies into LLPProcedure- Filing form 18 (iii) Only shareholders can be partners no one else (iv) Security interest in the assets, if any, to be disclosed (may be a pledge) (v) Latest IT filing acknowledgement to be enclosed (vi) Details of prosecution initiated against or show cause notice u/CA on Com. (can be verified at Master Data)

Conversion of Companies into LLPProcedure- Filing form 18 (vii) Proceedings by or against the company is pending in any Court or Tribunal or any other Authority. ( under any LAW) (viii) Rejection of earlier application for conversion, if any –SRN of old F 18 and reasons (ix)Details of conviction, ruling, order, judgment of any Court- subsisting if any (x) consent of all the secured creditors with list, if any,

Conversion of Companies into LLPProcedure- Filing form 18 (x) Clearance, approval or permission from any body/ authority, if any, (SEBI_ For stock broker / Investment Advisors Com. ) (xi) Statement of Assets and Liabilities of the company duly certified as true and correct by the auditor ( Similar to FTE) & 2 Directors

Conversion of Companies into LLP Procedure Filing Form 3 • Within 30 days of date of registration of the LLP • With signed LLP agreement- (on Stamp Paper) Filing of form 14 • Within 15 days of the date of registration of the LLP with ROC • Attachment- LLP Conversion Certificate • Digitally signed by one of the directors in the company before conversion

Conversion of Firm into LLP Pre- Requisites/ Conditions -DINs for DPs -PAN /Passport for partners -DSCs minimum for 2 DPs -Firm must be have registered with Partnership Act 1932 or such other Act -At least one financial year must have been completed -All partners should be partners of LLP no one else.

Conversion of Firm into LLPPre- Requisites/ Conditions -Update Income tax filings -Liabilities and obligations of the firm prior to the conversion- Unlimited liability -Settlement with disinterested partners and reconstitution of Partnership deed and its registration -Obtaining list of present partners from Registrar of Firm /other authority

Conversion of Firm into LLPProcedure • Partners Resolution • Filing of form 1 –Name availability • If existing name not available -Change of name of partnership/reconstitution deed & its registration • Filing of form 2 - With subscriber sheet and Proof of address • Filing of form 17 • Filing of form 3 • Filing of form 14 (Physically)

Conversion of Firm into LLPProcedure-Filing Form 17 Things to be ensured before or at time of filing of form 17 -(i) Individual Consent/statement (as per Part-B of form 17) from partners (ii) Only partner for firm can be partners no one else (iii) Security interest in the assets, if any, to be disclosed (may be a pledge) (iv) Latest IT filing acknowledgement to be enclosed

Conversion of Firm into LLPProcedure-Filing Form 17 (v) Proceedings by or against the Firm is pending in any Court or Tribunal or any other Authority. ( under any LAW) (vi) Rejection of earlier application for conversion, if any –SRN of old 17 (vii)Details of conviction, ruling, order, judgment of any Court- subsisting if any (viii) consent of all the secured creditors with list, if any,

Conversion of Firm into LLPProcedure-Filing Form 17 (ix) Clearance, approval or permission from any body/ authority, if any, (SEBI_ For stock broker / Investment Advisors Com. ) (x) Statement of Assets and Liabilities of the company duly certified as true and correct by Chartered Accountant in practice

Conversion of Firm into LLPProcedure Filing Form 3 • Within 30 days of date of registration of the LLP • With signed LLP agreement- (on Stamp Paper) Filing of form 14 • Within 15 days of the date of registration of the LLP (together with Conversion Certificate) with Registrar of Firm • Physically signed by one of the partners of firm before conversion

Conversion of Company/Firm into LLP Other -Post Conversion Issues In Case of Company Conversion Obtain -Fresh IT PAN/ TAN -New Bank Account -All other applicable Licences like Service Tax, VAT, Excise, Customs, IEC etc. Maintain Formerly known as “…………Private Limited” (regd. No. 08/……. . ) converted and registered as LLP on 31 -03 -2013 vide LLPIN: ……. with limited liability- for 12 months

Conversion of Company/Firm into LLP Other -Post Conversion Issues In Case of Firm into LLP Obtain -Alteration of IT PAN/ TAN -Change of name in existing Bank Accounts -Intimation to all other applicable Licences like Service Tax, VAT, Excise, Customs, IEC etc and obtain the change of name effected in their records.

Conversion of Company/Firm into LLP Post Conversion Effect In case of Company Conversion Stamp duty issues (If any, immovable property involved) (Some state Govts. not accepting) Capital Gain Taxation ( If criteria mentioned at IT Act, 1961 is not satisfied) No DDT/ Deemed dividend/TDS etc but AMT applies RPTs allowed/ no approval 295, 297, 314; Sch XIII etc Carry forward loss & Acc. Dep next 8 yrs. Tax Saving as per illustration. Unlimited no. of partners No audit upto Rs. 40 lakhs Turnover/ Rs 25 lakhs Contribution

Conversion of Company/Firm into LLP Post Conversion Effect In case of Company Conversion Criteria as per IT -Last 3 years average turnover of Company should be less than 60 lakhs (eligibility) -No consideration to partners fr conversion -All assets of company to be assets of LLP -All shareholders to be partners of LLP -Accumulated profits on date of Conversion are not allowed for distribution for next 3 years from date of conversion (Post) -50% of shareholders of Company should continue to hold for next 5 years (Post)

Conversion of Company/Firm into LLP Post Conversion Effect In case of Firm Conversion No Stamp duty issues even if immovable properties are involved No Capital gains as per IT, reason IT firm includes LLP there same status continues Maintain Formerly known as “…………Firm” (regd. No. /……. . ) converted and registered as LLP on 31 -03 -2013 vide LLPIN: ……. with limited liability- for 12 months

Thought -Forever • “Teach yourselves, teach everyone his/her real nature, call upon the sleeping soul and see how it awakes. Power will come, glory will come, goodness will come, purity will come, and everything that is excellent will come, when this sleeping soul is roused to self conscious activity. ” —Swami Vivekananda

Further Discussions

• Thanks to one and all for providing opportunity to me to share my experience gained accidentally