What all company compliances are required if a private limited company has to acquire the assets and liabilities of a LLP?
If a private limited company wants to acquire the assets and liabilities of an LLP, the first and foremost thing it requires is the consent of all the partners of the LLP. The partners must agree that the limited liability partnership shall be liquidated or dissolved after transferring all the assets and liabilities to the private limited company because there is nothing left in an LLP after excluding assets and liabilities. Then the acquiring company shall hold a board meeting where resolution is to be passed to acquire the assets and liabilities of the LLP, authorize particular directors or any other person to carry out particular tasks, sign the final agreement and filing of forms. The auditors of the acquiring company shall take a detailed note of all the assets and liabilities including accounts payable and receivable, if any due. On the other side, the legal department of the company shall look after all the legal compliances related with this process of acquisition and also see whether any legal proceeding is pending on the part of LLP or not.
Another way can be an acquisition by way of consideration whether in cash or in equity. Acquisition by way of cash consideration is the simplest method where the company can put a purchase offer to the LLP for acquiring its assets and liabilities. The partners will be required to hold a meeting asking all the partners to give their consent in this regard. Followed by that if all the partners agree then modifications shall be made in Limited Liability Partnership deed by adding a clause of admitting the acquiring company as a partner. The company can appoint any of its nominees as one of the designated partners in the LLP to act on behalf of the company. Then the company can take the hold on assets and liabilities of the LLP and pay in cash to the partners of the LLP.
In case of acquisition by way of equity shares, firstly a Chartered Accountant should be approached for valuation of the company as well as the Limited Liability Partnership. The CA will do the valuation and based on that evaluation the company will issue its shares to the partners of the Limited Liability Partnership. If we see from the compliance point of view, it is a private placement of shares which refers to the offer or invitation to subscribe or issue of shares by the company to a selected group of people. Its biggest advantage is that companies can do them quickly and it involves a minimum of regulatory paperwork.
The company is required to maintain a complete record of private placement offers in form PAS-5. Copy of such records along with private placement offer letter in Form PAS-4 along with the names of the offeree has to be filed with the Registrar of Companies within 30 days from the date of circulation which includes the date of the offer letter. Also, a return of allotment of securities has to be filed within 30 days of allotment as per Section 42 of the Companies Act, 2013 and has to be filed with the Registrar in Form PAS-3 along with the fee provided in the Companies (Registration Offices and Fees) Rules, 2014 with a complete list of all security holders containing full name, address, PAN, and e-mail id of such security holders, class of security held, date of becoming security holder, number of securities held, nominal value and amount paid upon such securities and particulars of consideration received, issue share certificates and update minutes book and registers.