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Unlisted Public Co. into LLP

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Unlisted Public Co. into LLP

Key Benefits:

  • A) Tax Benefits

    The most important reason for conversion of a company into an LLP is on the tax front. Currently, the Income-tax Act, 1961, provides for payment of minimum alternate tax (MAT) as also for payment of dividend distribution tax (DDT) by companies. An LLP, which is not a company, should not be liable to pay DDT.

  • B) No Limit on number of shareholders/partners

    Unlike private limited companies (shareholders limited to 50), an LLP can have unlimited number of partners.

  • C) Minimal Compliance Level & Cost effective model

    There is no need of compliances related to meetings and maintenance of huge statutory records.

  • D) Automatic transfer

    All the assets and liabilities of the Company immediately before the conversion become the assets and liabilities of the LLP.

  • E) No Stamp Duty

    All movable and immovable properties of the company automatically vest in the LLP. No instrument of transfer is required to be executed and hence no stamp duty is required to be paid.

  • F) No Capital Gain Tax

    No Capital Gains tax shall be charged on transfer of property from Company to LLP.

  • G) Continuation of Brand Value

    The goodwill of the Company and its brand value is kept intact and continues to enjoy the previous success story with legal recognition.

  • H) Carry Forward and Set off Losses and Unabsorbed Depreciation

    The accumulated loss and unabsorbed depreciation of Company is deemed to be loss/ depreciation of the successor LLP for the previous year in which conversion was effected. Thus such loss can be carried for further eight years in the hands of the successor LLP.

Key requirements:

  • On Conversion, all the members/shareholders of the company shall become partners of the LLP in the same proportion in which their capital accounts stood in the books of the company on the date of the conversion.
  • Upto date filing of Income tax returns & Annual returns with RoC
  • consent of all the unsecured creditors for the proposed conversion
  • The partners receive consideration only by way of allotment of shares in LLP
  • Minimum 2 Designated Partners
  • Atleast 1 of the designated partners shall be an Indian Resident
  • If a body corporate is a partner, it has to nominate a natural person as its nominee
  • The Partners and Designated Partners can be same person
  • There is no concept of share capital, but there has to be some sort of contribution from each partner
  • DIN (Director Identification Number) for all the  Designated Partners
  • DSC (Digital Signature Certificate) for two of the Designated Partners

Steps in Conversion of Unlisted Public Limited Company into an LLP:

STEP NO. STEPS TIME FRAME
(Working Days)
1 Preliminary Documentation

Discussion between BMC Team & the Promoters of the Company:

  • Ascertaining document requirement and availability
  • Preparation of signing documents by BMC
  • Signing of the Incorporation documents by Promoters
  • Sending the Signed document by Promoters to BMC
5

(Varies by the response time taken by the Promoters)

2 DSC (Digital Signature Certificate)

Getting DSC for Designated Partners for digital authentication of the Incorporation documents

1
3 DIN (Director Identification Number)

Approved DIN is a pre-requisite for incorporation process

1
4 Preparation of Main Object & Name Availability Search
  • Preparation of Main Object by BMC
  • The Promoters have to provide atleast 6 (Six) names in the order of priority
  • To make an online search of availability of names as desired by the Promoters
  • Confirmation of the draft main object & the final name
3

(Varies by the response time taken by the Promoters)

5 Application for Name Availability
  • Filing of Form 1 with the concerned ROC
5
6 Incorporation Process:
  • After ROC's approval for name of the Company, filing all the Incorporation documents with the ROC
  • Online uploading of e-Forms
  • Payment of Registration fees
  • Receiving Incorporation Certificate
15
7 Post-Incorporation Process:
  • Drafting LLP Agreement by BMC
  • Confirmation of LLP Agreement by the Promoters
  • Stamping of LLP Agreement
  • Filing of Form 3
5

(Varies by the response time taken by the Promoters)

 

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