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CS Executive · Setting Up of Business, Industrial and Labour Laws · Conversion of Business Entities

Ramesh and Suresh run a partnership firm in Pune and wish to convert it into a limited liability partnership. Under the Limited Liability Partnership Act, 2008, how is such a conversion to be carried out?

A firm converts into an LLP in accordance with the relevant Chapter of the LLP Act, 2008 and its Second Schedule. A mere partners' agreement is insufficient, and neither prior conversion into a company nor a Tribunal order is the prescribed method.

  1. AOnly by first converting the firm into a private company
  2. BIn accordance with the conversion Chapter of the Act and the Second ScheduleCorrect
  3. COnly through an order of the Tribunal sanctioning a scheme
  4. DBy a simple partners' agreement, with no statutory procedure

Explanation

Section 55 of the LLP Act states that a firm may convert into an LLP in accordance with the provisions of its Chapter and the Second Schedule. The Act therefore prescribes a statutory procedure, not mere agreement, and does not require prior conversion into a company or a Tribunal order.

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