16 November, 2011

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Conversion of CA Firms into LLP's - Council Guidelines

In terms of the Council decision dated 14 July, 2011, following guidelines for conversion of  CA  firms  into  LLPs  and  constitution  of separate  LLPs  by  the  practicing  Chartered Accountants  have  been finalized which  are  applicable for  conversion  of  CA  firms  into LLPs or formation of new LLPs by the members in practice of the Institute subject to the provisions of  the Limited Liability Partnership  (LLP) Act, 2008 and Rules & Regulations framed there under:-


(A)  Conversion of CA firms into LLPs
1. All  existing  CA  firms who want  to  convert  themselves  into  LLPs  are  required  to follow  the provisions  of Chapter-X  of  the  Limited  Liability  Partnership Act,  2008 read with  Second  Schedule  to  the  said  Act  containing  provisions  of  conversion from existing firms into LLP.

2. In  terms  of  Rule  18(2)  (xvi)  of  LLP  Rules-  2009,  if  the  proposed  name  of LLP includes the words `Chartered Accountant’ or chartered Accountants, as the case may be, as part of the proposed name, the same shall be referred to the Institute of Chartered Accountants of  India  (ICAI) by the Registrar of LLP and  it shall be allowed by the Registrar only if the Secretary, ICAI approves it.

3. If the proposed name of LLP of CA firm resemble with any other non-CA entity as per the naming Guidelines under LLP Act and its Rules, the proposed name of LLP of  CA  firms  may  include  the  word  `Chartered  Accountant’  or  `Chartered Accountants’, as the case may be in the name of the LLP itself and the Registrar, LLP may allow  the same name, subject  to compliance  to Rule 18(2) (xvi) of LLP
Rules as referred above.

4. For  the  purpose  of  registration  of LLP  with  ICAI  under  regulation  190  of  the Chartered Accountants Regulations, 1988,  the partners of  the  firm shall apply  in ICAI  Form  No.  ‘117’ and  the  ICAI  Form  No.  ‘18’ along with  copy  of  name registration  received  from  the  Registrar  of LLP and  submit  the  same  with the concerned Regional office of the ICAI. These Forms shall contain all details of the officers  and  other  particulars  as  called  for  together  with  the signatures  of  all partners or authorized partner of the proposed LLP.

5. The names of the CA firms registered with the ICAI shall remain reserved for the partners as one of the options for LLP names subject to the provisions of LLP Act, Rules and Regulations framed there under.

6. The following guidelines relating to seniority and other criteria shall be followed for registration of LLP with ICAI.

(i) Where two similar or identical or nearly similar firm names (whether the partners of such firms are same or not) have been registered by ICAI, under the purposed LLP,  only  one  such  firm  name  shall  be  approved  and remaining  firm  registered with  ICAI, either desires to  convert  into LLP or not, a  change  in  the  firm name shall be required.

(ii) The name of  the LLP may be  like `X & Co. LLP’ or `X & Associates LLP’ and no other suffix shall be approved and registered by ICAI.

(iii) The newly converted CA LLPs registered with ICAI shall be allowed to work only in terms of Section 2(2) of the Chartered Accountants Act, 1949 and the object of LLP to be incorporated  in Form-2 and Form 17 of  the LLP  rules, 2009 or  in LLP agreement, shall be in the nature of Professional Services allowed under Section 2(2)  of  the Chartered Accountants Act,  1949. LLP  shall  be  subject  to  the  same regulations, as if they were in partnership firm. Mere conversion into LLP does not give any privileges, which were not earlier with the CA firms.

(iv) Inter-se seniority among the firms shall be given to LLP as per existing policy of ICAI. In  other  words,  LLPs  shall  carry  the  same  seniority,  as  the  firm  shall otherwise have under  the existing policy of  ICAI.    In  case of merger of 2 LLPs, same rules as applicable to firms merging shall apply.

(v)The  non  converted  firms  shall  also  remain  on  the  same  position  of  seniority  in relation  to converted LLPs  as  the  converted LLPs  shall have  the  same  inter-se seniority as the firms had earlier to conversion.

7. These guidelines of  conversion of CA  firms  into  LLP  shall also be applicable  to  the conversion of proprietary firm into LLP subject to the provisions of LLP Act, Rules and Regulations framed there under. The conversion of proprietary firm shall be by way of incorporation of new LLPs.

8. The registration number (with minimum 6 numbers) of LLP with ICAI, shall remain the same Firm Registration Number (FRN) allotted to the firm before the conversion by  ICAI  with  the  Regional  Code  like  `W’  for  Western,  `E’  for  Eastern,  `S’  for Southern, `N’ for Northern and `C’ for Central Region as under:- Region Code
FRN W 1 2 3 4 5 6
FRN S 2 0 0 0 0 0
FRN E 3 0 0 0 0 0
FRN C 4 0 0 0 0 0
FRN N 5 0 0 0 0 0

9. Introduction of  LLP,  shall not affect  the existing  regulations  in  force as  regards the name allotment to chartered accountants firms.

10. In case there is a merger of a firm and conversion with LLP and vice-versa, seniority may  be  provided  to  the  surviving  entity  as  per  policy  as  per Annexure  ‘A’  attached herewith.

11. The provisions of CA Act, 1949, Chartered Accountants Regulations, 1988 and Code of Ethics issued by ICAI shall be applicable to all partners of the converted CA firms into LLP jointly and severally.

12.The  following Guidelines  are  subject  to  the  clarification  from Ministry  of  Corporate Affiars (MCA), Govt. of India, New Delhi:

(i) Wherever the existing partnership firm have been appointed as statutory auditor of any company after  following  the due procedure under  the Companies Act, 1956 and the said firm with the same partners is converted/formed into LLP, then the same FRN will  continue  and  the  Board  of  Directors  of  the  Company  may  take  on  record  the conversion/formation of the CA firms into LLP and the new LLP shall be deemed to be an Auditor of the said company for the said financial year in terms of Section 58(4) of
the LLP Act, 2008.

(ii) Wherever more than one partnership firms with all the partners desire to convert/form only one LLP, in that case the name and FRN may be selected of only one of such firms for the purpose of registration with ICAI and;

(i) The other such firms shall stand dissolved.
(ii) Seniority shall be decided as per applicable rules of ICAI.
(iii)  The  Board  of  Directors  of  all  the  Companies  who  have  appointed  all  the erstwhile firms as auditors, may  take a declaration  from  the said LLP with all  the partners of all the erstwhile firms on record and the appointment of auditors of all the erstwhile firms made under the Companies Act, 1956, shall be deemed to be in the name of the said LLP.

(B) Constitution of separate LLPs

13 All members of ICAI in practice who want to constitute separate LLPs are required to follow  the  provisions  of  the  Limited  Liability  Partnership  Act,  2008  read  with  the Rules framed there under.

14 In  terms  of  Rule  18(2)  (xvi)  of  LLP  Rules-  2009,  if  the  proposed  name  of  LLP includes  the words  `Chartered  Accountant’  or  chartered  Accountants,  as  the  case may be, as part of  the proposed name,  the  same  shall be  referred  to  the  ICAI by Registrar of LLP and  it shall be allowed by  the Registrar only  if  the Secretary, ICAI approves it.

15 For  the  purpose  of  registration  of  LLP  with  ICAI  under  regulation  190  of  the Chartered Accountants Regulations, 1988, the partners of the firm shall apply in ICAI Form  No.  ‘117’  and  the  ICAI  Form  No.  ‘18’  along with  copy  of  name  registration received from the Registrar of LLP and submit the same with the concerned Regional office  of  the  ICAI.  These  Forms  shall  contain  all  details  of  the  officers  and  other particulars  as  called  for  together with  the  signatures  of  all  partners  or  authorized partner of the proposed LLP.

16. The following guidelines relating to seniority and other criteria shall be followed for registration of LLP with ICAI.

(i) Inter-se seniority among the firms shall be given to LLP as per existing policy of ICAI.  In  other words,  LLPs  shall  carry  the  same  seniority,  as  the  firms  shall otherwise  have  under  the  existing  policy  of  ICAI.    In  case  of merger  of two LLPs, same rules, as applicable to firms merging, shall apply.

(ii) The name of the LLP may be like `X & Co. LLP’ or `X & Associates LLP’ and no other suffix shall be approved and registered by ICAI.

(iii) The newly constituted CA LLPs registered with ICAI shall be allowed to work only  in  terms of Section 2(2) of the Chartered Accountants Act, 1949 and  the object of LLP to be incorporated in Form-2 and Form 17 of the LLP rules, 2009 or  in  LLP  agreement,  shall  be  in  the  nature  of  Professional  Services  allowed under  Section  2(2)  of  the  Chartered  Accountants  Act,  1949.  LLP  shall  be subject to the same regulation, like the partnership firms. Mere conversion into LLP does not give any privileges, which were not earlier with the CA firms.

17. These guidelines of conversion of CA firms into LLP shall also be applicable to the conversion of proprietary  firm  into LLP subject  to  the provisions of LLP Act, Rules and Regulations framed there under. The conversion of proprietary firm shall be by way of incorporation of new LLPs.

18. The registration number (with minimum 6 numbers) of LLP with ICAI, shall be like the Firm Registration Number being allotted to the firms by ICAI with the Regional Code  like `W’  for Western, `E’  for Eastern, `S’  for Southern, `N’  for Northern and `C’ for Central Region .

19. Introduction  of  LLP,  shall  not  affect  the  existing  regulations  in  force  as  regards Name allotment to chartered accountants firms.

20. The provisions of CA Act, 1949, Chartered Accountants Regulations, 1988 and Code of  Ethics  issued  by  ICAI  shall  be  applicable  to  all  partners  of  the  LLP  jointly  and severally.

21. In case of any dispute in respect of these guidelines, the same shall be referred to the committee of the Institute and the decision of that committee shall be final and binding on the members of the Institute.

22. For  the  purpose  of  any  clarification  regarding  the  approval  and  registration  of proposed LLP with the ICAI, the requests can be sent at the following address:-

The Secretary
The Institute of Chartered Accountants of India
P.B No: 7100, “ICAI Bhavan”, Indraprastha Marg
New Delhi – 110002
23. These Guidelines shall come into force w.e.f. 4th
 November, 2011.

Source : (Guidelines No.1-CA (7)/03/2011, dated 4th November, 2011)



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