CLARIFICATION ON CONVERSION OF A FIRM INTO A LIMITED LIABILITY PARTNERSHIP GENERAL CIRCULAR NO. 09/2013 [F.NO. 1/10/2012-CL-V], 2013- 04 -30

(1)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 clarification with 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 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 firm into 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 a firm 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 the firm 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 the notification number SO 1152(E), dated 23rd May, 2011 and General Circular 30A, dated 26 May, 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.

This Case Law has been Shared by a Student of ICAI Vinanti Zatakiya. You can reach her at vinanti2504@gmail.com

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How to Register a Partnership firm & How to Get Tin No.

For registration of the partnership firm first of all we have to understand the concept of partnership. A partnership is formed by an agreement, which may be either written or oral. When the written agreement is duly stamped and registered, it is known as "Partnership Deed". Ordinarily, the rights, duties and liabilities of partners are laid down in the deed. But in the case where the deed does not specify the rights and obligations, the provisions of the THE INDIAN PARTNERSHIP ACT, 1932 will apply. The deed, generally contains the following particulars:-

• Name of the firm. 
• Nature of the business to be carried out. 
• Names of the partners.
• The town and the place where business will be carried on.
• The amount of capital to be contributed by each partner.
• Loans and advances by partners and the interest payable on them.
• The amount of drawings by each partner and the rate of interest allowed thereon.
• Duties and powers of each partner. 
• Any other terms and conditions to run the business.

To register a partnership firm first of all you have to create a partnership deed which states all terms and conditions about capital, profit sharing ration, work responsibilities, situation for admission of a new partner, retirement of a partner, death of partners etc etc.

Partnership is defined as a relation between two or more persons who have agreed to share the profits of a business carried on by all of them or any of them acting for all. The owners of a partnership business are individually known as the "partners" and collectively as a "firm".

After it you have to get it registered. You have to go to DIC (District Industries Centre) where you can get it registered after paying registration fees.  For Delhi, you can apply online also for its registration.  Another way is to get the deed notarized & file a TIN application with the VAT authorities of your area.  They will inspect the location of the business and will seek for a guarantor.  After that they will register you and will issue a TIN number.  

Who Needs TIN number?
Tin number registration is must for Manufacture/Traders /Exporters/Dealers. It comes to new registration under VAT or Central sales tax will be allotted new TIN as registration number. However, all state commercial tax department of India has stipulation to provide new TIN to existing Manufacture/Traders /Exporters/Dealers to replace their old registration / CST number.

So, there is no difference in VAT/CST/TIN because these days only one number is needed for all type of sale you made. TIN number is called VAT number when it used for intra state sales. The same TIN number is being consider as CST number when it requires.

Documents required to Apply TIN number
1. ID Proof / Address proof / PAN card of proprietor with 4 to 6 number of photographs
2. Address proof of Business premises;
3. 1st Sale / Purchase Invoice, copy of LR/GR & payment/collection proof with bank statement
4. Surety/Security/Reference.

Above requiremnet may differ from state to state. Please check the applicability of each state

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