General Circular No 09/2013

Subject:
Conversion of a firm into a Limited Liability Partnership –Clarification.

The Ministry has been examining some of the issues raised by stakeholders with regard to clarifications on the provisions of the Limited Liability Partnership (LLP) Act, 2008 with regard to conversion of a partnership firm into LLP. The issues relate to clarificationwith regard to (i) conversion of multiple partnership firms (including audit firms) into a single LLP and (ii) manner in which appointee company shall take note of the change in the status of auditor once the relevant CA audit has got itself converted into a CA audit LLP as per the relevant provisions of the LLP Act, 2008.

(2) The relevant issues have been examined in the Ministry in consultation with the ‘Expert committee on LLP Issues’ set up in the Ministry and following clarifications are conveyed for the guidance of concerned stakeholders:-
(i) The provisions of sections 55 and 58 of the LLP Act, 2008 read with Second Schedule thereto, inter-alia, provide for requirements in respect of conversion of a single partnership firminto a single LLP. The LLP Act, 2008 does not provide for conversion of two or more firms into a single LLP.
(ii) The provisions of section 58(4) (b) of the LLP Act, 2008 provide that on conversion of afirm into an LLP, as per the provisions of the said Act all property, assets, interests, rights, privileges, liabilities, obligations relating to the firm and the whole of the undertaking of thefirm shall be transferred to and shall vest in the LLP without further assurance, act or deed. Accordingly, if a CA audit firm, being an auditor in a company under the Companies Act, 1956,gets converted into an LLP after complying with the relevant provisions of the LLP Act, 2008, then, such an LLP, in accordance with the provisions of section 58(4) (b) of the LLP Act, 2008 would be deemed to be the auditor of the said company. Reference is also drawn to thenotification number SO 1152(E) dated 23rd May, 2011 and General Circular 30A dated 26thMay, 2011 of the Ministry in this regard. The relevant appointee company may take note of such change in status of the auditor through a resolution of the Board.

3. The concerned stakeholders, Registrar of Companies, appointee companies should take note of the above clarifications and comply accordingly.

Yours Faithfully,
( J N Tikku)
Joint Director