Conversion of Partnership Firm Into Private Limited Company - Online Process
Hold a meeting of all the partners of Partnership Firm and take assent for the Conversion of Partnership Firm Into Private Limited Company.
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Conversion of Partnership firm into Pvt Ltd Company starting from Rs.15,000/-
Conversion of Partnership Firm Into Private Limited Company
- Hold a meeting for the Conversion of Partnership Firm Into Private Limited Company.
Hold a meeting of all the partners of Partnership Firm and take assent for the Conversion of Partnership Firm Into Private Limited Company. Since the liability of the members of the firm is unlimited, when a firm desires to register itself as a company as a limited company, the assent of the majority is required, not less than three-forth of the partners should be present in person.
- Consent from secured creditors of firm
Also Written consent or No Objection Certificate is to be obtained from the secured creditors of the firm, if any.
- Obtaining the Name Approval in RUN for Proposed Company
An application needs to be filed with the Registrar of Companies (ROC) to obtain the name for the proposed company after conversion, with various attachments stating the fact that the partnership firm is proposed to be converted under the Companies Act, 2013.
- Publishing the Advertisement in Two Newspaper (English Daily and Vernacular)
Pursuant to clause (b) of section 374 of the Act, firm seeking registration under the provision of Part I of Chapter XXI shall publish an advertisement about registration under the said Part, seeking objections, if any within twenty one (21) clear days from the date of publication of notice and the said advertisement shall be in Form No. URC. 2, which shall be published in a newspaper, in English and in the principal vernacular language of the district in which office of such firm situated and should be circulated in that district.
File an affidavit, duly notarized, from all the partners to provide that in the event of registration, necessary documents or papers shall be submitted to authority with which the firm was earlier registered, for its dissolution as partnership firm consequent to its conversion into private limited company.
- Filing of necessary forms with ROC
Filing of necessary forms with ROC for the approval of conversion and for registration of firm into the Private Limited Company along with all the necessary attachments which specifies the fact of conversion and also all the other basis charter documents like MOA, AOA, etc which are required in case of registration of company under the Companies Act, 2013.
Condition For Conversion of Partnership Firm Into Private Limited Company:
There should be 2 or more members in the partnership firm at the time of conversion.
(a) E-form URC-1 along with the following details:
- A list showing the names, addresses, and occupationsof all persons named therein as members with details of shares held by them.
- A listshowing the particulars of proposed as the first directors of the company.
- An affidavitfrom each of the persons proposed as the first directors, that he is not disqualified to be a director under sub-section (1) of section 164 and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief.
- Partnership deed, along with the revised deeds,in case the firm is registered.
- A statement of assets and liabilitiesof the partnership firm duly certified by a chartered accountant.
- A copy of latest income tax return of the Partnership Firm.
- A statement specifying the following particulars:
- The nominal share capitalof the company and the number of shares into which it is divided.
- The number of shares takenand the amount paid on each share.
(b) MOA & AOA:
After obtaining name approval, and approval of E-FORM URC-1 from the Registrar, the applicant is required to draft the Memorandum and Articles of Association and other relevant documents required for in-corporation.
(c) FILE E-FORMS:
The applicant shall file various documents including MOA and AOA in respective E-forms with Registrar of Companies. The Registrar on being satisfied on compliance shall issue a Certificate of Incorporation.
Benefits of Conversion of Partnership Firm Into Private Limited Company:
01Easier to Raise Funds
Raising funds as a private limited company is a comparatively easy task as it gives an opportunity for raising shares and has many ways to raise funds in the form of private equity and Banks and Financial Institutions.
02Limited Liability of Owners
The obligation or debts of the company does not create a charge over the owner’s personal assets. Their liability is limited only to the subscribed capital unpaid by them.
03Separate Legal Existence
A Private Limited Company is registered, a legal entity is born in eyes of law, which is separate from its owners and managers. The company can operate in its own name from opening a bank account to own assets and enter into a contract with parties. This also provides the capacity to sue third parties.
How to Conversion of Partnership Firm Into Private Limited Company
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Documents Required For Conversion of Partnership Firm Into Private Limited Company
- PAN CardPAN Card of shareholders and Directors. Foreign nationals must provide a passport.
- Identity ProofVoter ID/ Passport/ Driving License of Shareholders and Directors
- Address ProofTelephone Bill /Electricity Bill/ Latest Bank Account Statement of Shareholders and Directors
- PhotographLatest Passport size photograph of Shareholders and Directors
- Business Address ProofLatest Electricity Bill/ Telephone Bill of the registered office address
- Financial StatementsDuly certified copy of latest audited Finacial Statements
- Copy of ITRA copy of latest income tax return filed by the Partnership firm.
- Partnership DeedCopy of partnership deed to be provided
FREQUENTLY ASKED QUESTIONS ON CONVERSION OF PARTNERSHIP FIRM INTO PRIVATE LIMITED COMPANY
1. Can partnership firm converted into private limited company?
Ans. Partnership firm can convert into private company as per the provisions contained in Section 366 of the Companies Act, 2013.
2. Which is better partnership firm or Pvt. Ltd. Company?
Ans. Formation of partnership firm is easy than pvt. Ltd company. Pvt. Ltd. Company has separate legal entity. Both of has its own advantage and disadvantages.
3. Disadvantages of pvt. Ltd. Company?
Ans. Following disadvantages of private company:
- Compliance formalities
- Division of ownership
- Personal liability
4. What are the benefits of conversion of partnership firm into pvt. Ltd. Company?
Ans. Some benefits of Pvt. Ltd. Company are separate legal entity, limited liability, flexible management structure, protection from creditors, easy to raise capital.
5. What are consequences of partnership firm into pvt. ltd. company ?
Ans. No capital gain tax chargeable on transfer of property.
6. Can one person own a pvt. Ltd. Company?
Ans. A pvt. Ltd company can not be held by single person. Minimum two members required for formation of pvt. Ltd. Company.
7. What certificate is required to open pvt. Ltd. Company?
Ans. Private company can not commence business until obtain certificate of commence of business under companies Act,2013.
Following registered persons not required to file GSTR 1, 2 and 3 such as:
Goods and Services Tax (GST) is an indirect tax applicable on the supply of goods and services. It is a comprehensive, multistage, destination based tax. It has subsumed almost all the indirect taxes except a few state taxes. It is collected from point of consumption and not point of origin like previous taxes.
Documents attach in trademark application:-
A trademark can be registered by the Controller General of Patents Designs and Trademarks, Ministry of Commerce and Industry, Government of India under Trademark Act, 1999 to protect the identity of any goods and services.
Some basic information about Income tax
An income tax is a tax imposed on individuals or entities commonly known as taxpayers that varies with respective income or profits. Income tax generally is computed on taxable income which is calculated after various deductions. Taxation rates may vary by type or characteristics of the taxpayer.
Basic Features to Read before starting private limited company
Private company is required to add the word “Private limited” or “Pvt. Ltd.” to end of its name. Private company should have at least two member and two directors. Private company have right to issue debentures to any number of persons.
Features of Public Limited Company
MCA provides the facility for incorporation of public limited company. For incorporation, firstly apply for name through RUN (Reserve Unique Name) on MCA portal. After availability of name from ROC we should file incorporation form i.e. Spice 32, INC 33(for eMOA), INC 34(for eAOA), .