Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
The conversion is allowed
Starting as an LLP doesn’t trap you — it can be converted into a Private Limited company later under Section 366. The assets, liabilities and partners carry over into the new company, with the partners becoming shareholders. The detailed steps are covered in our guide on converting an LLP to a Private Limited company.
What it involves
In outline: name approval, consent of all partners, a newspaper advertisement inviting objections, a no-objection from creditors, and the incorporation forms. Done correctly, it can be broadly tax-neutral, but the conditions are strict — the partners must keep their stake for a set period and assets transfer as they are. Confirm the tax conditions before converting.
Why and when — an example
Example: a profitable services LLP lands a term sheet from a fund — which will only invest in a company. The LLP converts to a Private Limited company under Section 366 ahead of the round, so the fund can take priced equity. Because the process takes a few months, start it once a raise looks likely, not at the last minute. Our team can manage the conversion.