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THE SECOND SCHEDULE (See section 55) CONVERSION FROM FIRM INTO LIMITED LIABILITY PARTNERSHIP Interpretation. 1. In this Schedule, unless the context otherwise requires, - (a) "firm" means a firm as defined in section 4 of the Indian Partnership Act, 1932(9 of 1932); (b) "convert", in relation to a firm converting into a limited liability partnership, means a transfer of the property, assets, interests, rights, privileges, liabilities, obligations and the undertaking of the firm to the limited liability partnership in accordance with this Schedule. Conversion from firm into limited liability partnership. 2. (1) A firm may convert into a limited liability partnership by complying with the requirements as to the conversion set out in this Schedule. (2) Upon such conversion, the partners of the firm shall be bound by the provisions of this Schedule that are applicable to them. Eligibility for conversion. 3. A firm may apply to convert into a limited liability partnership in accordance with this Schedule if and only if the partners of the limited liability partnership into which the firm is to be converted, comprise, all the partners of the firm and no one else. Statements to be filed. 4. A firm may apply to convert into a limited liability partnership by filing with the Registrar - (a) a statement by all of its partners in such form and manner and accompanied by such fee as the Central Government may prescribe, containing the following particulars, namely:- (i) the name and registration number, if applicable, of the firm; and (ii) the date on which the firm was registered under the Indian Partnership Act, 1932(9 of 1932) or under any other law, if applicable, and (b) incorporation document and statement referred to in section 11. Registration of conversion. 5. On receiving the documents referred to in paragraph 4, the Registrar shall subject to the provisions of this Act, register the documents and issue a certificate of registration in such form as the Registrar may determine stating that the limited liability partnership is, on and from the date specified in the certificate, registered under this Act: Provided that the limited liability partnership shall, within fifteen days of the date of registration, inform, the concerned Registrar of Firms with which it was registered under the provisions of the Indian Partnership Act, 1932(9 of 1932) about the conversion and of the particulars of the limited liability partnership in such form and manner as the Central Government may prescribe. Registrar may refuse to register. 6. (1) Nothing in this Schedule shall be construed as to require the Registrar to register any limited liability partnership if he is not satisfied with the particulars or other information furnished under the provisions of this Act: Provided that an appeal may be made before the Tribunal in case of refusal of registration by the Registrar. (2) The Registrar may, in any particular case, require the documents referred to in paragraph 4 to be verified in such manner, as he considers fit. Effect of registration. 7. On and from the date of registration specified in the certificate of registration issued under paragraph 5,? (a) there shall be a limited liability partnership by the name specified in the certificate of registration registered under this Act; (b) all tangible (movable and immovable) property as well as intangible property vested in the firm, all 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 limited liability partnership without further assurance, act or deed; and (c) the firm shall be deemed to be dissolved and if earlier registered under the Indian Partnership Act, 1932(9 of 1932) removed from the records maintained under that Act. Registration in relation to property. 8. If any property to which sub-paragraph (b) of paragraph 7 applies is registered with any authority, the limited liability partnership shall, as soon as practicable after the date of registration, take all necessary steps as required by the relevant authority to notify the authority of the conversion and of the particulars of the limited liability partnership in such medium and form as the authority may specify. Pending proceedings. 9. All proceedings by or against the firm which are pending in any Court or Tribunal or before any authority on the date of registration may be continued, completed and enforced by or against the limited liability partnership. Continuance of conviction, ruling, order or judgment. 10. Any conviction, ruling, order or judgment of any Court, Tribunal or other authority in favour of or against the firm may be enforced by or against the limited liability partnership. Existing agreements. 11. Every agreement to which the firm was a party immediately before the date of registration, whether or not of such nature that the rights and liabilities thereunder could be assigned, shall have effect as from that date as if - (a) the limited liability partnership were a party to such an agreement instead of the firm; and (b) for any reference to the firm, there were substituted in respect of anything to be done on or after the date of registration a reference to the limited liability partnership. Existing contracts, etc. 12. All deeds, contracts, schemes, bonds, agreements, applications, instruments and arrangements subsisting immediately before the date of registration relating to the firm or to which the firm is a party, shall continue in force on and after that date as if they relate to the limited liability partnership and shall be enforceable by or against the limited liability partnership as if the limited liability partnership were named therein or were a party thereto instead of the firm. Continuance of employment. 13. Every contract of employment to which paragraph 11 or paragraph 12 applies shall continue to be in force on or after the date of registration as if the limited liability partnership were the employer thereunder instead of the firm. Existing appointment, authority or power. 14. (1) Every appointment of the firm in any role or capacity which is in force immediately before the date of registration shall take effect and operate from that date as if the limited liability partnership were appointed. (2) Any authority or power conferred on the firm which is in force immediately before the date of registration shall take effect and operate from that date as if it were conferred on the limited liability partnership. Application of paragraphs 7 to 14. 15. The provisions of paragraphs 7 to 14 (both inclusive) shall apply to any approval, permit or licence issued to the firm under any other Act which is in force immediately before the date of registration of the limited liability partnership, subject to the provisions of such other Act under which such approval, permit or licence has been issued. Partner liable for liabilities and obligations of firm before conversion. 16. (1) Notwithstanding anything in paragraphs 7 to 14 (both inclusive), every partner of a firm that has converted into a limited liability partnership shall continue to be personally liable (jointly and severally with the limited liability partnership) for the liabilities and obligations of the firm which were incurred prior to the conversion or which arose from any contract entered into prior to the conversion. (2) If any such partner discharges any liability or obligation referred to in sub-paragraph (1), he shall be entitled (subject to any agreement with the limited liability partnership to the contrary) to be fully indemnified by the limited liability partnership in respect of such liability or obligation. (2) If any such partner discharges any liability or obligation referred to in sub-paragraph (1), he shall be entitled (subject to any agreement with the limited liability partnership to the contrary) to be fully indemnified by the limited liability partnership in respect of such liability or obligation. Notice of conversion in correspondence. 17. (1) The limited liability partnership shall ensure that for a period of twelve months commencing not later than fourteen days after the date of registration, every official correspondence of the limited liability partnership bears the following: (a) a statement that it was, as from the date of registration, converted from a firm into a limited liability partnership; and (b) the name and registration number, if applicable, of the firm from which it was converted. (2) Any limited liability partnership which contravenes the provisions of sub-paragraph (1) shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees and with a further fine which shall not be less than fifty rupees but which may extend to five hundred rupees for every day after the first day after which the default continues.
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