Limited companies and LLPs may share a number of characteristics, but they have very different internal structures and taxation requirements. This means that you cannot change a limited company to an LLP by simply converting one structure to another. The only option available is to dissolve the existing company and then register the business as a Limited Liability Partnership.
This type of procedure is much easier than it was before the introduction of the LLP structure in 2001. However, please consult a specialist accountant or solicitor before doing so because the process, which includes transferring business assets and changing legal agreements, involves a great deal of planning and administration.
How to approve a change of business structure
To change a limited company to an LLP, you must get approval from the company shareholders. A general meeting should be held and the shareholders will have to pass a special resolution. A 75% majority vote in favour of the change must be achieved.
If the change of structure is approved, you will then need to identify and change the contractual agreements that the company has with its suppliers, clients, banks, lenders, employees, etc. A transfer agreement will have to be completed to officially transfer the business, assets, and liabilities to the new LLP when it has been set up.
The company’s articles of association and shareholders’ agreement will have to be redrafted as an LLP Agreement. This agreement will outline the internal management structure of the new partnership, the rights and duties of LLP members (partners), and the relationship between the members and the LLP.
Registering an LLP
When you are ready to register an LLP, you can complete an online application form through Rapid Formations. Our Limited Liability Partnership package will enable you to incorporate an LLP with Companies House in just 3 working hours.
To register your new LLP, please follow these 5 simple steps:
- Choose a name for your LLP – you can use your company name if the business has been officially dissolved or you changed the name of the old company, otherwise, you will have to choose a new name for your LLP
- Select our LLP formation package
- Choose any required address services – we offer a Registered Office Address, Service Address, and Business Address in London or Glasgow
- Proceed to checkout to pay for your formation package and any additional services
- Fill in the online application form and submit it electronically to Companies House
When your application is complete, we will check it over before sending it to Companies House via secure Software Filing. Within approximately 3 working hours, your application should be approved and your new LLP will be ready to trade. You will receive your incorporation documents via email and you will have free access to our Online Admin Portal. This facility will allow you to view and update your LLP details online at any time.