Sometimes businesses need the transfer of ownership; be it LLP of Private Limited Company. There are many reasons for this. There may be statutory requirements because of which one may need to transfer the ownership. For example, if it is not possible to be the owner of more than one business enterprise at the same time.
The willful transfer of ownership is also possible. Meaning, if the owners desire to transfer the ownership, it can be done. Both the LLP and PLC have got a different due procedure that needs to be followed to transfer the ownership.
Transferring of ownership of an LLP
Formation of an LLP takes place with the combination of partners and designated partners. Under the law, it is required to have a minimum of two designated partners. The transfer of ownership will require the agreement to add or remove a partner in LLP and thereby by substituting the current designated partners for the new ones. Once appointed, a partner or a designated partner can be changed, removed or appointed.
Here is the procedure to add or remove partner in LLP:
1. Applying for a digital signature certificate
It is essential for verifying an individual’s identity and for signing the form digitally. Submit the following documents for obtaining such a certificate:
- PAN Card of the applicant
- Address proof of the applicant
- Photo of the applicant
- Email Id of the applicant
- Phone number
2. Apply for DIN Number
In the form named DIR-3, the Director Identification Number of the Director will be applied along with the address proof and the identity proof of the applicant.
- After this, all the existing partners of the LLP will call a meeting and pass a resolution to add a designated partner in an LLP.
- The supplementary LLP agreement must be drafted to add a new partner.
- The acceptance of the incoming partner is necessary for writing.
- Filing of Form-4 within 30 days of the appointment is essential.
- After that, filling of form no-3 is essential along with the supplementary and the original LLP agreement within 30 days of entering into a supplementary agreement.
- After this, the name of such new partners reflects and will be on the website in the Ministry of Corporate Affairs.
For a private limited company
For transfer0 of ownership of the company, one has to transfer the shares of the said company or even add or remove a director in the company. Preference is given to the existing shareholders and then to the outsiders.
Steps to transfer Shares of a Private Limited Company
Step1: Going through the articles of association of the company to check that they do not contain any restriction.
Step 2: Obtain the share transfer deed in the prescribed format.
Step 3: Executing the share transfer agreement duly signed by the Transferor and Transferee.
Step4: Stamping of the share transfer agreement is necessary.
Step4: Have a witness sign on the share transfer agreement with his/her name and address.
Step5: Attaching the share certificate with the transfer agreement and delivering the same to the Company.
Step6: Company will a resolution and issue
A comparative outlook of the transfer of ownership between LLP and PLC reveals some essential steps. Moreover, these steps are very necessary to transfer the ownership of either the PLC or the LLP. We can conclude that both the LLP and PLC involve some essential due process. However, it is clear from this study that the transfer of ownership in LLP is a somewhat tedious task in comparison with PLC, many times it involves an additional step of the addition of designated partners.
Furthermore, in LLP, filing of different forms is necessary, unlike in the case of the PLC. Hence, we can conclude that both the processes are different but have the same objective. Both are unique in their way.