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Several partnership firms began converting to LLPs after the LLP Act was
introduced in 2008. The benefits of conversion are obvious, including the possibility to accept
an infinite number of partners, the creation of a new legal body, limited liability, and
simplicity in the transfer of ownership. These benefits of LLP over partnerships have led to
LLP's rising popularity among small and medium-sized firms.
The Indian Partnership Act, 1932 requires the Partnership Firm that wants to become an LLP to register. Unregistered Partnership Firm can't be transformed to LLP. The partners in an LLP that was formed by converting a partnership firm into an LLP must be the same. As a result, it is recommended that the Partnership Firm retire all of the Partners who do not wish to be a part of LLP, and that new partners be joined after LLP has been incorporated.
But, there is a formal procedure to follow in order to accomplish the aforementioned process, and a legal advisor from LegalRaasta may help you with this.
The applicant must apply for a Director Identification Number (DIN) and a Digital Signature Certificate (DSC).
The company name is checked and verified in this step to ensure that it complies with the Ministry of Corporate Affairs' (MCA) requirement.
Once the name of the business has been approved by the relevant authorities, the applicant will submit the application form for the certificate of incorporation through the relevant MCA portal, together with any necessary supporting papers.
After completing the aforementioned steps, the applicant must submit all necessary paperwork to the MCA.
The partnership would get its certificate of incorporation from the Registrar through this procedure, which would result in the transfer of all of its interests, assets, and obligations to the LLP.
The last step requires the LLP's partners to inform the firms in a form that must be filed to the Registrar within 15 days of this process about the change in the partnership's status to LLP.
It would raise the amount of investment in the LLP and boost the company's reputation, attracting additional money from investors.
A partner's departure or death does not cause the partnership firm to dissolve.
Limited liability would provide the firm's partners a degree of independence and keep the partners' liabilities distinct from the firm's.
When compared to a conventional partnership firm, an LLP has more flexibility and a faster decision-making process.
The Indian government has loosened the rules governing FDI in an LLP.
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