CONVERSION OF CA FIRMS INTO LLP

Prepared by CA K S Ravi
REQUIREMENTS FOR CONVERSION

Minimum two partners are
required for converting a
partnership firm into LLP.
Two partners to be
designated as “designated
partners” and there can be
more than two designated
partners.

The designated partners should obtain

• DPIN or DIN by filing Form DIR 3 with Central
Government electronically.
• Digital Signature Certificate (DSC) Class 2 or
above from a Certification Agency (CA)
INITIAL PROCEDURE REGARDING NAME

Check the name availability which is available on the

www.mca.gov.in

Name should not be similar to other LLP/Company or in violation of

Trade Mark Act of 1999 or is undesirable.

Apply for reservation of name in RUN-LLP (Reserve Unique Name)

before making an application under FiLLiP.
VARIOUS FORMS

The conversion of a CA firm into LLP is as per the provisions contained in Chapter 10 and the Second
Schedule of the LLP, Act 2008

Apply in LLP Form No. 17 for conversion of a firm into LLP (Rule 38(1) of Limited Liability
Partnership Rules, 2009)

File Form No. 14 (See Rule 33 – Form for intimating the registrar of firms about conversion of firm
into limited liability partnership)

Certificate of registration on conversion of a firm to new name of the LLP in Form No. 19 will be issued by
Government of India, Ministry of Corporate Affairs, Central Registration Centre.
CHAPTER 10 – LLP Act, 2008
PROVISIONS UNDER CHAPTER 10

A Firm may convert into LLP in accordance with the provisions of Chapter 10 read with the Second Schedule (as per Section 55), by
making an application in Form No. 17

Section 58 – The registrar, on satisfying that the firm has complied with the provision of the Second schedule shall subject to the
provisions of this Act and the rules made thereunder, register the documents submitted under the Second schedule and issue a
certificate of registration in Form No. 19 stating that the LLP is, on and from that date specified in the certificate, registered under this
Act.

The LLP so registered shall, within 15 days of the date of registration, inform the concerned registrar of firms about the conversion
and of the particulars of the LLP in Form no. 14

Upon such conversion, the partners of the firm and the LLP shall be bound by the provisions of the Second schedule.
Continued …
There shall be a LLP by the name specified
in the certificate of registration registered
under the LLP Act, 2008;
Notwithstanding anything contained in any
other law for the time being in force, on and
from the date of registration specified in the
certificate of registration issued under the
Second schedule –
All tangible (movable or immovable) and
intangible property vested in the firm, all
assets, interests, rights, privileges, liabilities, The firm shall be deemed to be dissolved
obligations relating to the firm and the and removed from the records of the
whole of the undertaking of the firm shall be registrar of firms.
transferred to and shall rest in LLP without
further assurance act or deed; and
SECOND SCHEDULE (SECTION 55)
FIRM MEANS

As per Section 4 of the Indian Partnership Act, 1932, "Partnership" is defined as "the relation
between persons who have agreed to share the profits of a business carried on by all or any of
them acting for all".

However, the Indian Partnership Act, 1932 does not define the term "Firm". In common
parlance, the terms "Firm" and "Partnership" are often used interchangeably to refer to a
business entity formed by two or more persons who agree to carry on a business together with
the objective of making a profit. So, a "Firm" is essentially a partnership business as defined
in Section 4 of the Indian Partnership Act, 1932
CONVERT

Convert means a transfer of property, assets, interest, rights,

privileges, liability, obligation and the undertaking of a firm to the
LLP in accordance with the second schedule.

Upon conversion, the partners of the firm shall be bound by the

provisions of the second schedule that are applicable to them.
ELIGIBILITY FOR CONVERSION

A Firm may apply to convert into LLP in

accordance with the second schedule, if and only if,
the partners of LLP into which the firm is to be
converted, comprise all the partners of the firm and
no one else.
STATEMENT TO BE FILED
The name and registration number,
if applicable, of the firm and
A statement by all of its partners in
Form No. 3 and accompanied by
appropriate fee shall be filed to
Central Government containing
the following particulars.
Incorporating documents and
The date on which the firm was
statement referred to in Section 11
registered under the Indian
(signed by advocate or company
partnership Act, 1932 or under any
secretary or chartered accountant
law, as applicable
or cost accountant)
REGISTRATION OF CONVERSION

On receiving the documents, the registrar shall register it and

issue a certificate of registration as already stated earlier.

Provided that the LLP shall, within 15 days of date of

registration, inform the concerned registrar of firms about the
conversion and the particulars of LLP.
REGISTRAR MAY REFUSE TO REGISTER

Nothing in this schedule shall be construed as to require the registrar to register any LLP if he is
not satisfied with the particulars or other information furnished under the provisions of this Act.

If it is so refused, the appeal shall lie before the tribunal and until the tribunal is constituted, the
appeal may be made before the Company Law Board (CLB)

The registrar may, in any particular case, require the documents submitted to be verified in such
manner, as he considers fit.
EFFECT OF REGISTRATION
There shall be a LLP by the name
specified in the certificate of registration.
On and from the date of registration
All tangible (movable or immovable) and
intangible property vested in the firm, all
assets, interests, rights, privileges,
The firm shall be deemed to be dissolved
liabilities, obligations relating to the firm
and removed form the records of the
and the whole of the undertaking of the
registrar of firms.
firm shall be transferred to and shall rest
in LLP without further assurance act or
deed; and
REGISTRATION RELATING TO PROPERTY

If any property is being transferred, the LLP shall as soon as

practicable after the date of registration, take all necessary
steps as required by the relevant authority to notify the
authority of conversion and of the particulars of the LLP in
such medium and form as the authority may specify.
PENDING PROCEEDINGS

All proceedings by or against the firm which are

pending in any court or tribunal or before any
authority, on conversion may be continued,
completed and enforced by or against the LLP.
CONTINUANCE OF CONVICTION, RULING OR
ORDER OR JUDGEMENT

Any conviction, ruling, order or judgement of

any court, tribunal or other authority in favour
of or against the firm may be enforced by or
against the LLP.
EXISTING ARRANGEMENTS

Every agreement to which the

firm was a party immediately
before the date of registration
shall have the effect, as from that
date, as if –

For any reference to the firm, in

The LLP were a party of such an respect of anything to be done,
agreement instead of the firm; on or after that date of
and registration, is a reference to
LLP.
EXISTING CONTRACTS

All Deeds, Contracts, Schemes, Bonds,

Agreements, Applications, Instruments
and Arrangements subsisting immediately
before the date of registration relating to
the firm or to which the firm is a party,
shall continue on and after that date as if it
relates to LLP.
CONTINUANCE OF EMPLOYMENT

Every contract of employ-

ment shall continue to be in
force on and after the date of
registration as if LLP was the
employer
EXISTING APPOINTMENT, AUTHORITY AND
POWER

Every appointment of the firm in any role or capacity shall take

effect and operate from the date of registration, as if LLP was
appointed (including audit).

Any authority or power conferred on the firm shall assume as if

it is conferred on the LLP
APPROVALS AND LICENSE

All Approvals and Licenses shall now

stand applicable to LLP after the date of
registration, as if it was issued in its
favour.
PARTNERS LIABILITY

Every partner of a firm that has converted into LLP shall continue to be personally
liable (jointly and severally with the LLP) for the liabilities and obligations of the
firm, which were incurred prior to conversion or which arose from any contract
entered into prior to conversion.

If any partner discharges any liability/obligation on behalf of LLP, he shall be

entitled(subject to limitations of LLP agreement to the contrary) to be fully
indemnified by LLP
NOTICE OF CONVERSION IN CORRESPONDENCE

The LLP shall ensure that for a

period of 12 months commencing • A statement that it was, as from the date of registration converted from a
not later than 14 days after the date firm into LLP; and
of registration, every official • The name and registration number, if applicable, of the firm from which
correspondence of the LLP bears it was converted.
the following –

• LLP which contravenes the said provision shall be punishable with a fine
which shall not be less than Rs. 10,000/- but which may extent to Rs.
Contravention 1,00,000/-. And if it is a continuing default with a further fine, which
shall not be less than Rs. 50 but which may extend to Rs. 500 for every
day the default continues.
Council Guidelines for conversion of CA firms into LLPs
dated 14-11-2011 vide Guidelines No.1-CA (7)/03/2011
Provision for Chartered Accountants in particular

All existing CA firms to follow the provisions of LLP Act, 2008 read with the second schedule and as
amended from time to time.

In terms of rule 18(2)(xvi), if the proposed name of the LLP includes the name of Chartered Accountant/s
as part of the proposed name, the same shall be referred to ICAI by the registrar of LLP and it shall be
allowed by the registrar only if the Secretary of ICAI approves it.

If the name resembles with any other non CA entity as per the naming guidelines under LLP Act and its
rules, the proposed name of LLP of CA firms may include the word Chartered Accountant/s in the name
of LLP itself and the registrar may allow the same, subject to the compliance of other provisions (rule
18(2)(xvi) as referred above).
CA Regulations 1988

For the purpose of registration of LLP with ICAI under regulation 190 of Chartered
Accountants Regulation, 1988, the partners of the firm shall apply in ICAI Form No. 117
and ICAI Form No. 18 along with copy of name registration received from registrar of
LLP and submit the same to the concerned regional office of ICAI. These Forms shall
contain all details of the officers and the other particulars as called for together, with
signatures of all partners or authorized partner of the proposed LLP.

The names of CA firms registered with ICAI shall remain reserved for the partners and
one of the options for LLP names, subject to the provisions of LLP Act, Rules and
Regulations framed thereunder.
CA Regulations and the LLP Act for name approval

Where two similar or identical or nearly similar firm names (whether the partners of such firms are same or not) have been registered
by ICAI, under the proposed LLP only one such firm name shall be approved and remaining firm registered with ICAI, either desires
to convert into LLP or not, a change in the firm name shall be required.

The name of the LLP may be like `X & Co. LLP’ or `X & Associates LLP’ and no other suffix shall be approved and registered by
ICAI.

The newly converted CA LLPs registered with ICAI shall be allowed to work only in terms of Section 2(2) of the Chartered
Accountants Act, 1949 and the objects of the LLP to be incorporated in FiLLiP and Form17 of the LLP Rules, 2009 or in LLP
agreement, shall be in the nature of Professional Services allowed under Section 2(2) of the Chartered Accountants Act, 1949. LLP
shall be subject to the same regulations, as if they were in partnership firm. Mere conversion into LLP does not give any privileges,
which were not earlier with the CA firms.
Continued …

Inter-se seniority among the firms shall be given to LLP as per existing policy of
ICAI. In other words, LLPs shall carry the same seniority, as the firm shall
otherwise have under the existing policy of ICAI. In case of merger of 2 LLPs,
same rules as applicable to firms merging shall apply.

The non converted firms shall also remain on the same position of seniority in
relation to converted LLPs as the converted LLPs shall have the same inter-se
seniority as the firms had earlier to conversion.
CONVERSION OF SOLE PRACTIONERS INTO LLP

These guidelines of conversion of CA firms into LLP shall

also be applicable to the conversion of proprietary firm into
LLP subject to the provisions of LLP Act, Rules and
Regulations framed there under. The conversion of
proprietary firm shall be by way of incorporation of new
LLPs
FIRM NUMBER

The registration number (with minimum 6 numbers) of LLP

with ICAI, shall remain the same, Firm Registration Number
(FRN), allotted to the firm before the conversion by ICAI with
the Regional Code like `W’ for Western, `E’ for Eastern, `S’ for
Southern, `N’ for Northern and `C’ for Central Region
SENIORITY AND CODE OF ETHICS

In case, there is a merger of a firm and conversion with LLP and vice-versa,
seniority may be provided to the surviving entity as per policy

The provisions of CA Act, 1949, Chartered Accountants Regulations, 1988 and

Code of Ethics issued by ICAI shall be applicable to all partners of the
converted CA firms into LLP jointly and severally.
SUBJECT TO CLARIFICATIONS

Wherever the existing partnership firm have been appointed as a statutory auditor of any company after following the
due procedure under the Companies Act, 2013 and the said firm with the same partners is converted/formed into LLP,
then the same FRN will continue and the Board of Directors of the Company may take on record the
conversion/formation of the CA firms into LLP and the new LLP shall be deemed to be an Auditor of the said company
for the said financial year in terms of Section 58(4) of the LLP Act,2008. Clause 14 of the Second Schedule.

Wherever more than one partnership firms with all the partners desire to convert/ form only one LLP, in that case the
name and FRN may be selected of only one of such firms for the purpose of registration with ICAI and; Clause 14 of the
Second Schedule.
OTHER GUIDELINES

The other such firms shall stand dissolved.

Seniority shall be decided as per applicable rules of ICAI.

The Board of Directors of all the Companies who have appointed all the erstwhile firms as auditors, may take a declaration
from the said LLP with all the partners of all the erstwhile firms on record and the appointment of auditors of all the erstwhile
firms made under the Companies Act, 2013, shall be deemed to be in the name of the said LLP.
CONSTITUTION OF SEPARATE LLPS

All members of ICAI in practice who want to constitute separate LLPs are required to follow the provisions of the Limited Liability Partnership Act, 2008 read
with the Rules framed there under.

In terms of Rule 18(2) (xvi) of LLP Rules- 2009, if the proposed name of LLP includes the words `Chartered Accountant’ or chartered Accountants, as the
case may be, as part of the proposed name, the same shall be referred to the ICAI by Registrar of LLP and it shall be allowed by the Registrar only if the
Secretary, ICAI approves it.

For the purpose of registration of LLP with ICAI under regulation 190 of the Chartered Accountants Regulations, 1988, the partners of the firm shall apply in
ICAI Form No. ‘117’ and the ICAI Form No. ‘18’along with copy of name registration received from the Registrar of LLP and submit the same with the
concerned Regional office of the ICAI. These Forms shall contain all details of the officers and other particulars as called for together with the signatures of all
partners or authorized partner of the proposed LLP.
SENIORITY GUIDELINES ON CONVERSION

The following guidelines relating to seniority and other criteria shall be followed for registration of LLP with ICAI.

• Inter-se seniority among the firms shall be given to LLP as per existing policy of ICAI. In other words, LLPs shall
carry the same seniority, as the firms shall otherwise have under the existing policy of ICAI. In case of merger of
two LLPs, same rules, as applicable to firms merging, shall apply.

• The name of the LLP may be like `X & Co. LLP’ or `X & Associates LLP’ and no other suffix shall be approved and
registered by ICAI.

• The newly constituted CA LLPs registered with ICAI shall be allowed to work only in terms of Section2(2) of the
Chartered Accountants Act, 1949 and the object of LLP to be incorporated in Form-2 and Form17 of the LLP rules,
2009 or in LLP agreement, shall be in the nature of Professional Services allowed under Section 2(2) of the
Chartered Accountants Act, 1949. LLP shall be subject to the same regulation, like the partnership firms. Mere
conversion into LLP does not give any privileges, which were not earlier with the CA firms.
CONTINUED…
These guidelines of conversion of CA firms into LLP shall also be applicable to the conversion of proprietary firm
into LLP subject to the provisions of LLP Act, Rules and Regulations framed there under. The conversion of
proprietary firm shall be by way of incorporation of new LLPs.

The registration number (with minimum 6 numbers) of LLP with ICAI, shall be like the Firm Registration Number
being allotted to the firms by ICAI with the Regional Code like `W’ for Western, `E’ for Eastern, `S’ for Southern,
`N’ for Northern and `C’ for Central Region .

Introduction of LLP, shall not affect the existing regulations in force as regards Name allotment to chartered
accountants firms.

The provisions of CA Act, 1949, Chartered Accountants Regulations, 1988 and Code of Ethics (Revised 2019)
issued by ICAI shall be applicable to all partners of the LLP jointly and severally.
Continued …
• In case of any dispute in respect of these guidelines, the same shall be referred to the committee of
the Institute and the decision of that committee shall be final and binding on the members of the
Institute.
• For the purpose of any clarification regarding the approval and registration of proposed LLP with
the ICAI, the requests can be sent at the following address:-
• The Secretary
• The Institute of Chartered Accountants of India
• P.B No: 7100, “ICAI Bhavan”, Indraprastha Marg
• New Delhi – 110002

• These Guidelines shall come into force w.e.f. 4th November, 2011.
Fees to be paid for incorporation/conversion The amount
shall be paid
• Every LLP shall specify LLP identification number (LLPIN) in all the forms used. into the
Public
• Fees to be paid for registration Account of
India through
Credit Card,
LLP Contribution Fees Internet
Less than Rs. 1,00,000 Rs. 500 Banking,
Remittance
Between Rs. 1 lakh to Rs. 5 Lakh Rs. 2,000
at Bank
Between Rs. 5 Lakh to Rs. 10 Lakh Rs. 4,000 Counter or
Between Rs. 10 Lakh to Rs. 25 Lakh Rs. 5,000 any other
mode
Between Rs. 25 Lakh to Rs. 1 Crore Rs. 10,000 approved by
Above Rs. 1 Crore Rs. 25,000 CG
Forms for various issues

Prior consent to act as a designated partner to the LLP has to be given in Form 9 and
the particulars of the individual who has given his consent to act as designated
partner shall be filed in Form 4 along with fees (part of Annexure – A)

In the case of incorporation, such details are given in Form FiLLiP along with fee.
Designated Partner Identification Number

To get either DPIN or DIN Form DIR 3 has to be filed electronically.

If a person holds both DIN and DPIN, his DPIN shall stand cancelled and DIN shall be
sufficient for being appointed as designated partner.

Any change in particulars in DPIN or DIN shall be filed in Form DIR 6

The concerned designated partner shall file the relevant changes to the LLP on which he is
a designated partner within 30 days of such change.
Incorporation of LLP

The incorporation document shall be filed in FiLLiP with the registrar having jurisdiction over the state where the
registered office is located along with a fee. In case of conversion Form 17 shall be used.

Application for allotment of DPIN or DIN shall not be made by more than 5 individuals in Form FiLLiP.

If the Form is resubmitted for rectifying the defect, total period of re-submission shall not exceed 30 days.

Certificate of Incorporation shall be issued by the registrar in Form 16, which shall mention PAN and TANN issued by IT
Department.
Address of LLPs

The intimation of other address for service of documents other than the registered office shall be given to the registrar in
Form 12, which will be as per LLP agreement or by way of a consent of all the partners.

Notice of change of place of registered office shall be given to the registrar in Form 15 within 30 days of complying
with the requirements.

It can be changed within the state or from one state to another.

Requisite fee shall be paid for intimating any such change.

Form of Contribution

The contribution of each partner shall be accounted for and

disclosed in the accounts of the LLP along with nature of
contribution and amount, which shall be valued by a practising
chartered accountant or by a practising cost accountant or by
approved valuer from the panel maintained by the Central
Government.
SMALL LLP
The contribution of which, does not
exceed Rs. 25 Lakh or such higher
amount not exceeding Rs. 5 crore, as
may be prescribed; and
Small LLP means a LLP –
The turnover of which, as per
statements of accounts and solvency for
the immediately preceding financial Which meets such other require-ments
year does not exceed Rs. 40 Lakh or as may be prescribed.
such higher amount, not exceeding Rs.
50 crore as may be prescribed; or
THANK YOU