Conversion of LLP into Partnership Firm
LLP, which is the recognised form of business organization was introduced in India by the way of Limited Liability Partnership Act, 2008 and the LLP Rules, 2009. A limited liability partnership (LLP) is a kind of partnership in which all the partners have limited liabilities. It is an alternative corporate form of business organization which gives the benefits of limited liability of a company and the flexibility of a partnership. Its existence continues irrespective of the changes in the partners and owners. It is also capable of entering into the contracts and holding of property in its own name.
It is a separate legal entity, and it is liable to the full extent of its assets but the liability of the partners is limited to their agreed contribution in the LLP. In an LLP, one partner is not responsible or is not liable for another partner’s misconduct or for negligence. In an LLP, all the mutual rights and the duties of the partners within the LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. However in the absence of such agreement, the LLP would be governed by the framework which is provided in Schedule I of the Limited Liability Partnership Act, 2008, which describes the matters relating to the mutual rights and the duties of the partners of the LLP.
Before filing an application for Conversion of existing LLP into Partnership firm, the businessman must ensure the following things:
- That the secured creditors have given their consent for such kind of conversion;
- They should give A notice in the newspaper about such Conversion of LLP into Partnership, one in English and in a vernacular language seeking objections must be published;
Can a Limited Liability Partnership(LLP) be converted into Partnership Firm?
No, An existing LLP cannot be converted in a Partnership Firm. There is no provision for such conversion in Limited Liability Partnership Rules, 2009. The Limited Liability Partnership is a modification of the Partnership concept. It is introduced by rectifying the conventional bottlenecks in the Partnership form of business structure. The lawmakers removed the privilege of converting themselves into Partnership firms.
Why should I choose LLP over Partnership Firm?
An LLP is usually opted by such entrepreneurs, who prefer to carry out their business in a conventional style. In an LLP, partners have a privilege of a limited liability, to the extent of their capital contribution in the business. Moreover, exclusivity of name is available.
Why should I choose Partnership Firm over LLP?
Registering a Partnership Firm is opted by such entrepreneurs, who prefers simplified annual compliance requirements. Though an LLP is the up-gradation of Partnership firm, it has stringent annual compliances, compared to that of a Partnership firm