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Conversion of a private limited company to LLP
LLP structure offers the advantages of both – a partnership and a corporation. Therefore, by converting the corporate to LLP, the business gains more operational flexibility. The characteristics of being a separate legal entity and indebtedness remain an equivalent. Further, the operations and management come directly in the hands of the LLP partner(s), unlike privately Company where it’s with the director(s).
LLP is governed by the LLP Agreement executed by the Partners. it’s lesser compliance requirements and it’s easier to work. It preserves the advantages of a partnership with providing security and credibility to a corporation. The conversion of personal limited to LLP must be followed by the approval of the Ministry by the web application providing necessary documents.
Benefits of converting Private Limited Company to LLP
- Rewards and returns to partners: The partners of the LLP receive multiple returns, like remuneration, the share of profit and also the interest on capital. The remuneration is purchased active participation by partners, whereas the share of profit is a component of profit generated from business activities.
- Independent liability: No partner is liable on account of the unauthorized actions of other partners. Thus, individual partners are shielded from the burden of joint liability created by another partner’s wrongful business decisions or misconduct.
- Less Statutory Compliance: The compliances to be fulfilled are less as compared to personal Ltd. An LLP isn’t required to take care of statutory records & registers. the need for a statutory audit is additionally relaxed just in case of LLP.
- Operational Flexibility: The partners are directly related to the day-to-day operations and management of LLP. Unlike a corporation, LLP is governed through the LLP Agreement which is executed mutually by the partners.
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