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TMI BlogLIMITED LIABILITY PARTNERSHIP-PART-XXXIII - (Registration and Effect of Conversion)X X X X Extracts X X X X X X X X Extracts X X X X ..... LIMITED LIABILITY PARTNERSHIP-PART-XXXIII - (Registration and Effect of Conversion) - By: - Dr. Sanjiv Agarwal - Limited Liability Partnership - LLP - Dated:- 14-10-2010 - - Section 58 - Registration and effect of conversion Section 58 of the LLP Act, 2008 seeks to provide the requirement and manner pursuant to which a firm, private company or an unlisted public company shall be allowed to be converted into a LLP. It also seeks to provide that the converted LLP shall, within fifteen days of the date of registration, inform the concerned Registrar of Firms or Registrar of Companies, as the case may be, with which it was registered about the conversion and of the particulars of the limited liability partnership in such manner a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd form as the Central Government may prescribe. The section also seeks to provide that on such conversion all property of the erstwhile entity shall vest in the LLP and the erstwhile entity shall be deemed to be dissolved and removed from the records of the Registrar of Firms or Registrar of Companies, as the case may be. Section 58 prescribes the statutory basis for the registration of LLP arising out of conversion from a firm, private company or an unlisted public company under section 55 , 56 or 57 respectively. Duties of Registrar [Sub-section (1)] It provides for the duties of Registrar and the LLP for registration of conversion by Registrar and its intimation by the LLP to the Registrar of firms or companies, as the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se may be. The Registrar on satisfying that all the provisions have been complied with, register the document submitted under schedules and issue a certificate of registration in such form as the registrar may determine stating that the LLP is, on and from date specified in the certificate, registered under this Act provided that the LLP shall, within fifteen days of the date of registration, inform the registrar of firms or Registrar of Companies as the case may be about such conversion. Position of Partners [Sub-section (2)] Upon conversion, the partners of the erstwhile firm or shareholders of the erstwhile company shall become the partners of the LLP and shall be bound by the provisions of applicable schedule ( II , III , or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IV , as the case may be) as they are no longer partner or member of firms or company, dissolved as a result of such conversion. Effect of Registration [ Sub-section (3)] Sub-section (3) deals with the effect of registration of conversion and states that w.e.f. the date of registration, the consequences and effect of conversion shall be according to second, third or fourth schedule. These schedules provide for the same. Date of Registration [ Sub-section (4)] On and from the date of registration specified in the certificate of registration, it has been provided that - (a) there shall be a LLP by the name specified in the certificate of Registration (b) all property of firm or company shall be transferred to and shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vest in the LLP (c) the firm or the company shall be deemed to be dissolved and removed from the records of the Registrar of firms or Registrar of Companies as the case may be Conversion of LLP into a Company Part IX of Companies Act, 1956 contain provisions for companies authorized to register under the Companies Act, 1956. Section 565 to 581 contain provisions in relation to companies capable of being registered, requirement for registration, authentication of statements, change of name, addition of 'limited' or 'private limited' to name, vesting of property on registration, etc. Though Companies Act does not specifically provide for conversion of LLP into a company, it appears that there is no restriction on such conversion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, a LLP can be converted into a company limited by shares by registration under Part IX of the Companies Act, 1956 subject to the provisions of section 565 to 581. Prescribed Fees Annexure B of LLP Rules prescribe the fees for registration of LLP including conversion of a firm or a private limited company or an unlisted public company into a limited liability partnership (LLP) as follows- (a) Limited Liability Partnership whose contribution does not exceed Rs. 1 lakh 500/- (b) Limited Liability Partnership whose contribution does not exceed Rs. 1 lakh but does not exceed Rs 5 Lakhs 2000/- (c) Limited Liability Partnership whose contribution does not exceed Rs. 5 lakh but does not ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed Rs 10 lakhs 4000/- (d) Limited Liability Partnership whose contribution does not exceed Rs. 10 lakh 5000/- Penalties (a) Penalties for contravening provision relating to notice of conversion in correspondence Clause 17(2) of Second Schedule , clause 15(2) of Third schedule and clause 15(2) of Fourth Schedule prescribe penalty for default in complying with the provision of sub clause (1) thereof in relation to publication of notice of such conversion in all official correspondence of LLP so converted for a period to twelve months. The offence is a continuing default and the punishment in the form of monetary fine is a one time fine as well as fine for each day of default till it continues. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penalty prescribed is as under- (a) Minimum fine Rs. 10,000 (b) Maximum fine Rs. 1,00,000 (c) further fine for continuing default till the default continues- (i) minimum fine Rs. 50 for every day (ii) maximum fine Rs. 500 for every day (from first day after which the default continues). (b) General penalty Section 74 provides for a general penalty. Accordingly, any person guilty of a offence under this the Act for which no punishment is expressly provided shall be liable to a fine which may extend to five lakh rupees but which shall not be l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess than five thousand rupees and with a further fine which may extend to fifty rupees for every day after the first day after which the default continues. = = = = = = = - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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