Stratup India Registration

This article tells us about the procedure and documents requirements regarding conversion of Partnership Firm into Private Limited company. This will help those who are new to this and want to change their Firm into Private Limited company. Initially people start business in partnership due to low budget, but with time they change these kind of partnership firm into Private Limited company to limit their liabilities and assets and get more and more benefit from such proposed company. Travelogy india provides expert advice in case of this type of conversion.

Why one needs conversion of partnership firm into Private Limited company?

• There is a benefit in taxation in case of private limited company.
• There is also no tax for capital gain.
• No such stamp duty and audit are required.
• Private companies still exist after the death of any of its shareholders also.
• It limits the assets and liabilities of directors as they do not have to sell their assets during bankruptcy. Assets and liabilities of the partners and Shareholders become the liabilities and Assets of the new private limited company.
• In case of private limited company (pvt Ltd) it can raise capital fund from any financial institution, capitalist or investors and shares are also easily transferable.
• Shareholders, directors of private limited company can easily manage their shares and funds. Perpetual succession is also a matter because of which directors wants this kind of conversion.
• Because of having separate legal entity people choose for conversion of Partnership Firm.

Few Things to keep in Mind Before Conversion of Partnership Firm into Private Limited company:

• At least 2 partners should be in the partnership firm.
• At least 2 directors are also needed.
• If any changes are needed then they can add some clause in deed.
• Partnership Firm should be registered with registrar firm.
• Majority of the firm must agree with the conversion of Partnership Firm to private limited company
• Under companies act 213, it is legal to change any kind of partnership firm into any company being permitted by Ministry of Corporate Affairs only.
• Share capital should be at least Rs. 100,000 for this conversion.
• All the directors must have DIN (Director identification Number).

Documents Needed

Basic documents necessary for conversion of partnership firm into private limited company-

• Pan card

  Shareholders, partners, directors must have their pan cards. In case of foreigners, they must provide a passport.

• Address Proof

  Shareholders and directors of any partnership firm can submit their recent bank account statement (copy of the recent partnership page of Bank account passbook) or electricity bill or telephone bill registered to their name as address proof.

• Identity proof

  self attested any ID proof like driving license, voter ID, pan card or passport of Shareholders and directors need to be shown.

• Photo

  Recent passport size colour photos of both the directors and Shareholders are necessary.

• Address proof of business

  Telephone bill or electricity bill of the office has to be submitted.

• Digital signature

  Digital signature and Digital Signature Certificate (DSC) of the directors and the Shareholders are mandatory.

• Copies of income tax return file

  Recent income tax return filed Copies of the partnership firm are must.

• Partnership deed of partnership firm

  self attested Copies of partnership deed must be provided by Shareholders, partners and directors.

Registration Process

Process for conversion of Partnership Firm into Private Limited company

• Organize a meeting for consent of majority of members : A meeting has to be organized in order to gain consent of most of the members of the firm for the conversion into Private Limited company.
• Approval of advertisement in form URC 2 in newspaper : In form no URC 2 an advertisement regarding the conversion should be published in the required language. Partnership must be mentioned there. Both in English Daily and Vernacular this advertisement be posted.
• DIN has to be obtained in DIR- 3 form.
• Approval of name of company: Under the Reserving Unique Named (RUN) directors, shareholders can submit 2 proposed names for approval. And at the end of the name of company pvt Ltd must be added.
• In E- form INC- 9 affidavit is required.
• After getting approval of name of company they have to provide are all the documents mentioned earlier along with the conversion form I.e. URC- 1.
• Proposed company is required to file e- form SPICE+ INC-33/ INC- 34/AGILE pro and Aldo URC- 1 ( conversion form ) and provide other charter documents like MOA (Memorandum of Association) and AOA (Articles of Association). All the documents have to be self attested. Several documentation like office address proof of business, partners' consent regarding conversion, utility bills' copy of two months old or less than two months old are necessary for filling up this forms.
• After submitting all the documents and information filed by application, registrar will issue a COI ( Certificate of Incorporation) for the proposed company.
• After conversion to private limited company, office address may differ from registered office address. There can be other different office addresses. Owners of the company must submit NOC ( No Objection Certificate) to make it confirm that there is no Objections regarding the premises which are being used by the company. This is done to keep things clear for future.

Note :-Private Limited companies have openness to any kind of market. Thus people go with this option. This companies limit one’s responsibilities. Incase of Bankruptcy personal assets of directors are not a matter to sell. Thus for large, medium, small businesses in India private companies are better option to go with.