How to Convert an LLP into a Private Limited Company (Form URC-1)

Short answer: Yes, an LLP can become a private limited company. Under section 366 of the Companies Act, 2013, an LLP with two or more partners can register as a company, and one with fewer than seven members registers as a private company. The LLP publishes a newspaper notice in Form URC-2, files Form URC-1 with the Registrar, and receives a certificate of incorporation in Form INC-11. On registration the LLP is deemed dissolved without any further act, and its property passes to the company.

Why LLPs convert

An LLP has partners and capital contribution, not shares. A company can issue shares to investors, give stock options to employees and bring in new shareholders without rewriting a partnership agreement each time. Owners usually convert when they plan to raise equity funding. If you are still choosing a structure, compare the two in LLP vs partnership vs private limited company.

The legal basis

• Section 366(1) includes a limited liability partnership in the bodies that may register as a company under Part I of Chapter XXI.
• Section 366(2) needs two or more members. It said "seven or more" until the Companies (Amendment) Act, 2017 changed it from 15 August 2018. Clause (vii) of its proviso adds that a company with fewer than seven members registers as a private company. Clause (iv) needs the assent of a majority of members.
• Section 374 requires the consent or no objection of secured creditors, and a newspaper advertisement inviting objections. Its proviso says that on registration, an LLP is deemed to have been dissolved under the LLP Act without any further act or deed.
• Section 368: all the LLP's property, movable and immovable (including actionable claims), vests in the company. Section 369: existing rights, debts and contracts are not affected. Section 370: pending legal proceedings continue.
• The procedure is in the Companies (Authorised to Register) Rules, 2014, as amended up to 2023.

Step-by-step process

1. Partners approve the conversion. Pass a resolution approving registration as a private limited company. Section 366 needs a majority; check whether your LLP agreement requires more.
2. Get secured creditors' no objection. If the LLP has secured loans, obtain a no objection certificate from each secured creditor and charge holder.
3. Prepare the company documents. Rule 3(1) applies the normal incorporation provisions of Chapter II, so the company needs an approved name, a memorandum and articles of association, and first directors with a DIN who consent to act.
4. Publish the URC-2 notice. Advertise the proposed registration in Form URC-2, in a newspaper in English and one in a vernacular language, circulating in the district where the LLP is situated. The notice invites objections within 21 clear days of publication. Serve a copy on the Registrar of LLPs (Rule 4(1) and (2)).
5. File Form URC-1 with the documents listed below. The lists of members and directors must be verified by a declaration of two or more proposed directors (Rule 3(5)).
6. Registrar's decision. The Registrar considers objections received within 30 days of the advertisement and, once satisfied, issues the certificate of incorporation in Form INC-11 (Rule 4(3) and (4)).

Documents filed with Form URC-1

Document	Source
List of partners with their names, addresses and occupations, and the shares each will hold (shares for cash and for other consideration shown separately), as on a day not more than six clear days before applying	Rule 3(2)(a)(i)
List of proposed first directors with DIN, passport number if any, residential address, interests in other firms or bodies corporate, and their consent to act	Rule 3(2)(a)(ii)
No objection certificate from secured creditors and charge holders, if any	Rule 3(2)(a)(iv)
Copy of the LLP's latest income tax return	Rule 3(2)(a)(vii)
Copy of the URC-2 notice as published, and of the notice served on the Registrar of LLPs, with proof of service	Rule 4(2)

Two attachments that older guides still list were removed by the Companies (Authorised to Register) Amendment Rules, 2023: a separate written consent of the majority of members, and an undertaking about stamp duty. Rule 3(4) also exempts LLPs from the undertaking to apply separately for dissolution, which firms, societies and trusts must give, because the LLP is dissolved automatically.

After the company is registered

• No separate LLP closure. The LLP is deemed dissolved on registration (proviso to section 374). You do not file Form 24 to strike it off. For a normal closure, see how to close an LLP.
• Registrations move to the company. The company has its own PAN, so update bank accounts, licences and contracts. For GST, the company takes its own registration, and the GST rules on transfer of a business let unused input tax credit move across (Form GST ITC-02).
• Income tax. Whether the transfer of the LLP's assets to the company is free of capital gains tax depends on conditions in the income-tax law, for example that all partners become shareholders in the same proportion as their capital accounts. A conversion on or after 1 April 2026 falls under the Income-tax Act, 2025, so ask your Chartered Accountant to confirm the exemption and its conditions under that Act before you file.

Frequently asked questions

How many partners are needed to convert an LLP into a private limited company?

Two or more. Section 366(2) was amended from "seven or more" to "two or more members" with effect from 15 August 2018. With fewer than seven members, the LLP registers as a private company.

Which form is used to convert an LLP into a company?

Form URC-1, filed with the Registrar after the proposed registration is advertised in Form URC-2. The Registrar issues the certificate of incorporation in Form INC-11.

Do we have to close the LLP separately after conversion?

No. Under the proviso to section 374, an LLP that registers as a company is deemed dissolved under the LLP Act without any further act or deed.

What happens to the LLP's assets, contracts and court cases?

All property of the LLP vests in the company (section 368). Existing rights, debts and contracts continue (section 369), and pending legal proceedings carry on as if no registration had happened (section 370).

Is consent of secured creditors needed?

Yes, if the LLP has secured creditors. Section 374(a) requires their consent or no objection, and Rule 3(2)(a)(iv) requires a no objection certificate from secured creditors and charge holders with Form URC-1.

Can an LLP with foreign investment convert into a company?

Yes. Under RBI's directions, an LLP with foreign investment in a sector open to 100% foreign investment under the automatic route, with no FDI-linked performance conditions, can convert into a company under the automatic route. See foreign and NRI partners in an LLP.

Starting a new LLP? We handle LLP registration in Ahmedabad and LLP registration anywhere in Gujarat, fully online on the MCA portal. Start with the documents required for LLP registration.