Changing from an LLP to LTD

[HugoWelsh]

Hi all,

Has anyone got any advice, or had any experience with switching a business from an LLP to an LTD?

My understanding is that we will need to dissolve the existing LLP before we can create the LTD as we want the same company name to be the same. I have read on other forums that dissolving an LLP can take up to 3 months? If this is true, how does the business operate for those three months while the LLP is being dissolved and before the LTD can be set up?

 

[intheTRADE]

https://www.incorporationservices.co.uk/converting-llp-to-company-limited-by-shares

 

[gpietersz]

I have looked at this briefly because I might do it in the future.

You might have to jump through some hoops (changing names of the LLP before incorporating the Ltd so they have different names) for example.

You transfer the business some time after the Ltd is incorporated and the LLP is dissolved.

Because it is a new entity you are going to have to open new bank accounts, possibly transfer existing contracts, sell assets from the LLP to the Ltd, etc.

 

[The Resolver]

Its a little complex and has to be done carefully, with documentation and advice on tax and solvency issues (whats the reason for the move?) however , in general, you could change the name of the LLP, and then register the ltd under the original name and have a document in which the LLP transfers its assets (if any) to the LTD for a payment (advice required on the amount to avoid transferring at an undervalue to the prejudice of creditors of the LLP (r to avoid/evade tax).The LLP can cease trading on the day the LTD commences trading, You have to make sure customers/clients are not left confused as to with whom they are dealing so full change of stationery etc,

Anyone else with thoughts on this?

 

[HugoWelsh]

Thanks, Graham. Some great points in your comment and also your video on shareholder agreements!

 

[Clinton]

Anyone else with thoughts on this?

Lots of other things involved but it depends on the circumstances. If the shareholders in the Ltd are not the same parties as those in the LLP, they'll need the company to have the standard protections for any assets acquired - title in any IP, for example.

Then there's TUPE.

Are all the assets being transferred or only some of them? Some assets are trickier to transfer. It's easy to sell a PC between the two businesses. Debtors is a different matter. So also any assets with encumbrances.

Some assets will lose all value (membership of organisations, ISO type certifications, approved supplier statuses, certifications etc).

Others will lose some value.

But there are also opportunities. Crystallising capital losses elsewhere to write off against the gains here is one example. Also, raising a director loan in the Ltd company. Lots of others.

If the OP's interest is just in the mechanics then fine. Otherwise, and if there's a large enough amount at stake, he'd be smart to go pay money and get proper advice instead of asking in these forums.