LLP to Private Limited & Vice Versa: What It Actually Involves
An LLP that has outgrown its structure faces a clear inflection point: raise equity from investors, issue ESOPs to attract senior talent, or list on a stock exchange — none of these are available to an LLP. Conversion to a Private Limited Company under Section 366 of the Companies Act 2013 is the formal mechanism, but it is not simply a registration change. It requires a newspaper advertisement, creditor NOC, partner consent, SPICe+ filing with Form URC-1, and a careful handover of the LLP's assets and liabilities to the new company.
Understanding the Service
The conversion of a Limited Liability Partnership (LLP) to a Private Limited Company is governed by Section 366 of the Companies Act 2013 read with the Companies (Authorised to Register) Rules 2014. The LLP applies to the Registrar of Companies (RoC) to be registered as a company — specifically, as a Private Limited Company — using Form URC-1 filed alongside SPICe+ (the standard incorporation form). Upon incorporation, the new company assumes all of the LLP's assets, liabilities, rights, and obligations by operation of law.
For the full scope, current process and what PNPC includes, see the dedicated LLP to Private Limited & Vice Versa service page.
Is This Relevant to Your Business?
- Equity fundraising planned — angel investors, venture capital, or private equity cannot invest in LLPs; they invest in equity shares of companies
- ESOP scheme desired — LLPs cannot issue shares or stock options; Private Limited Companies can under the Companies Act Section 62 and Rule 12 of the Companies (Share Capital and Debentures) Rules 2014
- VC term sheet or investor due diligence initiated — most institutional investors will require the entity to be a Private Limited Company before closing
- International business expansion — foreign parent or subsidiary structures work with companies, not LLPs, for most FDI and ODI purposes
When It Isn't the Right Fit
- No equity fundraising plans and no ESOP intention — the LLP's lower compliance burden may remain preferable
- Professional services firm (CA, architect, law firm) with only working partners — LLP is the appropriate form; conversion creates unnecessary compliance cost
- LLP has significant disputed liabilities or ongoing litigation — creditor NOC and liability handover during conversion becomes complex; resolve first
Common Questions
What does 'conversion under Section 366' actually mean — is the LLP wound up?
Section 366 of the Companies Act 2013 enables an existing entity (including an LLP) to register as a company — effectively converting into it. The conversion is not a winding-up followed by a fresh incorporation. The LLP is dissolved automatically at the moment the new company's Certificate of Incorporation is issued. The new company assumes all of the LLP's assets, liabilities, contracts, and rights by operation of law — without a formal transfer or assignment for each individual asset. This continuity is the principal advantage of conversion over a wind-up and re-incorporation.
Why can an LLP not simply raise equity investment — why does conversion matter?
An LLP is constituted by partners who hold partnership interests — not shares. It has no share capital, no authorised capital, and cannot issue equity shares to investors. Institutional investors (angels, VCs, PE funds) invest in equity shares of companies — they receive specific rights (anti-dilution, liquidation preference, board representation) attached to those shares. These rights do not exist in an LLP structure. An LLP also cannot issue ESOPs — employee stock options are structured as the right to acquire shares at a predetermined price, which requires a share-based structure. An LLP cannot comply with these requirements. Conversion is the only way to access these mechanisms.
Do all partners of the LLP need to consent to the conversion?
Yes. Under the Companies (Authorised to Register) Rules 2014, the consent of all partners of the LLP is required for conversion. The LLP Agreement may specify additional requirements — a meeting, a vote, a supermajority. If a partner dissents and cannot be persuaded, the conversion cannot proceed. This is one of the most important pre-conversion checks — PNPC assesses partner consent feasibility before advising to proceed. In cases of a dissenting partner, the LLP Agreement may have a mechanism for buyout at fair value that can precede the conversion.
Working With PNPC Global
Speak with a PNPC Chartered Accountant before beginning the LLP conversion. We will review your LLP's position and tax exposure, give you a realistic timeline and cost, and design the new company's structure so that it is investor-ready from Day 1.
PNPC Global has advised Chennai, Bangalore and Hyderabad businesses since 1986. Explore the full Conversion & Closure practice for related services, or go straight to the LLP to Private Limited & Vice Versa page for specifics.
Rates, thresholds and filing dates are set by the relevant authority and revised periodically. Treat anything numeric here as "ask PNPC for the current figure," not as a quoted fact.