15 December 2012
My partnership firm having 5 partners is to be converted into private limited.. Tell me the detailed procedure with all the forms, requarments & pre-cautions..!!
20 July 2024
Converting a partnership firm with 5 partners into a Private Limited Company (Pvt Ltd) involves several procedural steps and compliance requirements. Here’s a detailed procedure along with necessary forms, requirements, and precautions:
### Procedure to Convert Partnership Firm into Pvt Ltd Company:
#### Step 1: Preparation and Resolution
1. **Partnership Resolution:** - Hold a meeting of all partners and pass a resolution for conversion into a Pvt Ltd Company. - Decide on the terms of conversion, including valuation of assets, liabilities, and issuance of shares to partners.
#### Step 2: Name Approval and Reservation
2. **Name Approval:** - Check the availability of the proposed name for the Pvt Ltd Company on the MCA (Ministry of Corporate Affairs) portal. - Reserve the name using Form INC-1. Ensure the name complies with naming guidelines under the Companies Act, 2013.
#### Step 3: Memorandum and Articles of Association
3. **MOA and AOA:** - Draft Memorandum of Association (MOA) and Articles of Association (AOA) of the Pvt Ltd Company. - MOA defines the company’s objects, and AOA outlines rules for internal governance.
#### Step 4: Application for Conversion
4. **Filing Form URC-1:** - Prepare and file Form URC-1 (Application by a firm for registration under section 366 of the Companies Act, 2013) with the Registrar of Companies (ROC). - Attach documents including: - Partnership deed - Identity proof and address proof of partners - Name approval certificate - MOA and AOA - Consent of partners for conversion - Affidavit verifying compliance with requirements - Payment of prescribed fees
#### Step 5: Issue of Shares
5. **Allotment of Shares:** - Determine the shareholding pattern and issue shares to partners of the partnership firm in the Pvt Ltd Company. - Prepare and file Form INC-7 (Declaration of compliance with the requirements of the Companies Act, 2013) for incorporation of the Pvt Ltd Company.
#### Step 6: Obtaining Certificate of Incorporation
6. **Certificate of Incorporation:** - Upon scrutiny of documents and compliance with requirements, ROC will issue a Certificate of Incorporation. - The Pvt Ltd Company is legally formed from the date mentioned on the certificate.
#### Step 7: Post-Incorporation Compliance
7. **Post-Incorporation Formalities:** - Obtain PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) for the Pvt Ltd Company. - Open a bank account in the name of the company and transfer funds and assets. - Update statutory registers, minutes books, and other records as required by the Companies Act.
### Precautions and Considerations:
- **Tax Implications:** Ensure compliance with capital gains tax exemptions under Section 47(xiii) of the Income Tax Act, 1961, for transfer of assets from the partnership firm to the Pvt Ltd Company. - **Legal Documentation:** All agreements, resolutions, and filings should be prepared accurately and signed by authorized persons. - **Professional Advice:** Consult with a chartered accountant or legal advisor to ensure compliance with all regulatory requirements and manage the transition effectively.
By following these steps and precautions, the conversion of your partnership firm into a Pvt Ltd Company can be executed smoothly while adhering to legal and regulatory requirements. Each step involves specific forms and documentation, which should be prepared and filed meticulously to avoid delays or complications in the conversion process.
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