Rules 38-40 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rules 38, 39 and 40 form Chapters XV, XVI and XVII. Each takes one kind of entity and says how it applies to become an LLP, what the Registrar issues, and what intimation goes to the Registrar of firms or Registrar of Companies afterwards. The three rules run in parallel, which is why this article covers them together. All is as notified in 2009.
A firm converts under the Second Schedule to the Act (rule 38), a private company under the Third Schedule (rule 39), and an unlisted public company under the Fourth Schedule (rule 40). In each case an application is made in Part A of the prescribed form with a statement of the partners (firm) or shareholders (companies) in Part B. The Registrar issues a certificate of registration under his seal on conversion. The LLP then informs the concerned Registrar of firms or Registrar of Companies. These rules were to come into force on a date to be notified later (rule 1(2)(b)). The Rules and the Schedules have been amended since 2009.
Read this first: the 2009 text and later amendments
This article states what rules 38 to 40 provided as notified on 1 April 2009. The Rules have been amended several times since, and the forms, fees, time limits and the conversion process on the portal have changed. Rules 38 to 40 also came into force only on a date to be notified by the Central Government (rule 1(2)(b)); that notification is not in the text used here, so this article does not state when. Check the MCA portal and the current Rules before acting. This article gives no fee amount, no form field detail and no portal step.
The conversion routes are in the Act: see Section 55: conversion from firm into LLP with the Second Schedule, and Sections 56-57: conversion of private and unlisted public company into LLP with the Third and Fourth Schedules. For the current filing position, see our posts on the form for converting a firm into an LLP and the form for company conversion into an LLP. If you plan a conversion, our company to LLP or OPC conversion service covers the current route.
The three rules side by side
| Feature | Rule 38 (firm) | Rule 39 (private company) | Rule 40 (unlisted public company) |
|---|---|---|---|
| Schedule to the Act | Second | Third | Fourth |
| Application | Part A of the prescribed form | Part A of the prescribed form | Part A of the same form as rule 39 |
| Statement | Statement of partners, Part B | Statement of shareholders, Part B | Statement of shareholders, Part B |
| Fee | As in Annexure 'A' | As in Annexure 'A' | As in Annexure 'A' |
| Registrar's act | Certificate of registration under his seal | Same | Same |
| Intimation | To the concerned Registrar of firms, for para 5 of the Second Schedule | To the concerned Registrar of Companies, for para 4 of the Third Schedule | To the concerned Registrar of Companies, for para 5 of the Fourth Schedule |
Rule 38 uses Form 17 for the application and statement; rules 39 and 40 both use Form 18. The forms for the certificate and the intimation are the same across the three rules in the 2009 text; this article calls them "the form prescribed for this purpose".
Rule 38: conversion of a firm
38(1). "For the purposes of the Second Schedule, an application shall be made in the format provided in Part A of" the prescribed form "together with the statement of partners in format provided in Part B ... alongwith the fee". So two parts are filed together: the application and the statement of the partners.
38(2). The Registrar, "on conversion of the firm into the limited liability partnership", shall issue a certificate of registration under his seal in the prescribed form.
38(3). For the purposes of para 5 of the Second Schedule, the LLP shall inform the concerned Registrar of firms about the conversion in the prescribed form. Example. Gill & Sons, a registered partnership firm, wants to become Gill & Sons LLP. As notified in 2009, the firm files the application in Part A with the statement of partners in Part B. On conversion, the Registrar issues the certificate of registration. The LLP then informs the Registrar of firms with whom the firm was registered.
Rule 39: conversion of a private company
39(1). For the Third Schedule, the application is in Part A of the prescribed form, with the statement of shareholders in Part B, and the fee.
39(2). On conversion of any private company into an LLP, the Registrar issues a certificate of registration under his seal.
39(3). For para 4 of the Third Schedule, the LLP informs the concerned Registrar of Companies of the conversion in the prescribed form.
Rule 40: conversion of an unlisted public company
40(1). For the Fourth Schedule, the application is in Part A of the same form as rule 39, with the statement of shareholders in Part B, and the fee.
40(2). On conversion of any unlisted public company into an LLP, the Registrar issues a certificate of registration under his seal.
40(3). For para 5 of the Fourth Schedule, the LLP informs the concerned Registrar of Companies in the prescribed form. Note the paragraph numbers in the Schedules: the intimation is para 5 for the firm and the unlisted public company, but para 4 for the private company. The rules report this as printed.
How these rules connect to rules 32 and 33
Rules 32 and 33 cover the later steps for all three kinds of conversion: the certificate, an appeal to the Tribunal if registration is refused, and an intimation to the Registrar of firms or Registrar of Companies within fifteen days of registration. See the article on rules 32 and 33. Rules 38(2), 39(2) and 40(2) repeat the certificate, and rules 38(3), 39(3) and 40(3) refer to the intimation by reference to the relevant paragraph of the Schedules. The 2009 text does not say whether the rule 33 time limit of fifteen days also applies to the intimations under rules 38(3), 39(3) and 40(3); it is silent.
Drafting point. The certificate duty appears twice for each type of conversion, once in the conversion chapter (rules 38(2), 39(2), 40(2)) and once in rule 32(1). The text does not reconcile them. Rule 32 speaks of "a firm, private company or an unlisted public company" together.
What the rules do not say
- Eligibility and conditions. These rules say nothing about who may convert or on what conditions. Those are in the Act and the Schedules.
- Contents of the statements. The text refers to the formats in Part A and Part B but this article does not describe the 2009 form.
- Effect of conversion. The effect on assets, liabilities and registration is in the Act. See section 58 of the Act on registration and effect of conversion.
Practical points
- Identify which entity you are, and therefore which Schedule and rule apply.
- Prepare the statement of partners or shareholders with the application; both parts are filed together.
- Plan the post-conversion intimation to the Registrar of firms or Registrar of Companies.
- Remember that these rules started on a notified date, and that current conversion procedures differ from the 2009 text.
Need help converting into an LLP?
The Schedule that applies, the statements to be filed and the follow-up intimations differ by type of entity. Our company to LLP or OPC conversion team can handle the current process from application to certificate.
Key takeaways
- A firm converts under the Second Schedule (rule 38), a private company under the Third (rule 39), an unlisted public company under the Fourth (rule 40).
- Each application is in Part A of the prescribed form with a statement of partners or shareholders in Part B.
- The Registrar issues a certificate of registration under his seal on conversion.
- The LLP informs the Registrar of firms (for a firm) or the Registrar of Companies (for companies), as the relevant paragraph of the Schedule requires.
- Rules 38 to 40 were to commence on a date notified later (rule 1(2)(b)).
- All as notified in 2009; check the current process.
Read next
- Rules 32-33: conversion certificate, appeal to the Tribunal and intimation
- Rule 41: compounding of offences
- Conversion of a private company to LLP
- Section 58: registration and effect of conversion
Disclaimer: Based on the Limited Liability Partnership Rules, 2009 as notified on 1 April 2009. The Rules have been amended several times since; current forms, fees and time limits must be checked before acting. This article is general information, not legal advice; check the official text before acting.