Conversion into companies

14.1 Section 366 of the Act enables conversion of a partnership firm, LLP, co-operative society, society or any other business entity formed under any other law for the time being in force into companies under the Act. The Rules, however, provide for registration/conversion of only LLPs into companies though references to other entities are there in Forms URC-1 and URC-2. Hence, the Committee recommended to prescribe necessary Rules to enable other forms of business organizations also to convert into companies.

14.2 At present, an LLP is required to first obtain availability of name from the Registrar before filing Form URC-1 which requires avoidable information to be furnished. The present procedure is as elaborate as for an entity being registered for the first time under the Companies Act, 2013. The Committee recommended that the process for conversion of an LLP into a company may be made simpler by doing away with requirement for filing some documents, etc.

Relaxations on requirements to provide NOCs from other regulators.

14.3 Form URC-1 requires attachment of NOC from the Registrar of Firms. It was suggested that the same may be dispensed with. The Committee noted that registered as well as unregistered firms are enabled to be converted under Section 366. The requirement of NOC from existing regulators should be obtained by registered firms before effective conversion with a view to ensure that the applicant is reasonably compliant of the law by which it was hitherto governed.

Conversion into companies: proposed rules widen eligible entities, streamline LLP conversion and preserve regulator NOC checks. Proposed amendments broaden eligible entities for conversion under Section 366 beyond LLPs to include partnership firms, co operative societies and other entities, simplify the LLP to company conversion process by removing certain procedural filings and name availability steps, and adjust NOC requirements by dispensing with some mandatory attachments to Form URC 1 while maintaining that registered firms must obtain necessary regulator NOCs prior to effective conversion to ensure compliance with prior governing law.