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conversion of sole trading into limited company

yash doshi (article) (41 Points)

27 June 2008

what is the procedure of conversion of a sole proprietorship concern or a partnership firm into a private limited company?

and what are the tax implications in both the cases?

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12 Replies

bharti (studying) (55 Points)
Replied 17 January 2009

I want to convert a sole proprietorship into private limited Company.

What is a procedure and the applicapility of law and tax effect?

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CS Arpita Rajpurohit (Company Secretary) (1111 Points)
Replied 17 January 2009

Originally posted by :yash doshi
"	what is the procedure of conversion of a sole proprietorship concern or a partnership firm into a private limited company.

Attached File : 50 conversion formalities 1 .doc downloaded: 2865 times

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bharti (studying) (55 Points)
Replied 21 January 2009

Thanks arpita Ji

Well it would be great if some more information I could get for converting Sole prorietorship concern into PRIVATE Company.

What would be the steps and what documents are needed.

Also how the business will be transferred.

And what would be the impact- TAX IMPLICATIONS ETC.?

Thanks & Regards

Bharti

Komal (nil) (24 Points)
Replied 30 March 2009

Thanks Arpita Ji,

But like Bharati Ji I would also like to know more about converting Sole prorietorship concern into PRIVATE Company.

What would be the steps and what documents are needed.

Also how the business will be transferred.is there different way of transfering the business

And what would be the legal impliaction

Thanks & Regards,

Komal Jain

raspreet kaur (job) (55 Points)
Replied 31 March 2009

Dear Komal

A Sole Proprietorship firm can be converted into a Private Ltd. Company by way of a takeover.

For this what all you have to do is to execute a MOU between the proprietorship fim & the Company in which the value of firm shall be taken as consideration for takeover. If the consideration for takeover is to be discharged by way of allotment of shares, then F-2 or F-3 (depending upon the circumstances) shall be filed with the ROC in which copy of MOU shall be attached.

In case of takeover, no Capital Gain Tax is attracted.

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Komal (nil) (24 Points)
Replied 31 March 2009

thank you raspreet ji can u provide me complete checklist for different ways of converstion of solepropritor into pvt ltd co

raspreet kaur (job) (55 Points)
Replied 01 April 2009

Dear Komal

Sorry, i don't have the complete checklist for different ways.

But, as per my knowledge the other wayout is to make the Company, the proprietor of firm by way of purchase of complete business. A Company can be a sole proprietor of a firm & it is usually called a wholly owned subsidiary or division of a Company.

But in this case CG will be attracted.

U.M. NAGARAJ (SECRETARIAL OFFICER) (53 Points)
Replied 27 February 2010

In reply to Smt. CS Arpita ,

Madam,

Let me know under which provisions in companies act, 1956 talk about sole proprietorship. It talks about only Part IX companies not sole propreitorship. In my opinion sole preprietorship will be treated as an individual. Hence It can form the company like individual but conversion is not possible. If anybody has different view in this regard, I welcome but, but give your valid evidence to that.

DALIP KUMAR (ARTICLESHIP TRAINING) (25 Points)
Replied 21 May 2010

Please Send the detailed procedure of conversion of proprietory firm to a company

MANISH JAJOO (PARTNER) (21 Points)
Replied 29 August 2010

Under part IX a partnership firm can be converted into company. So no need to execute separate conveyancing for immovable properties. Now the properitorship firm if converted first into partnership firm, then getting the partnership firm registered, then applying for approval of name with conversion of this partnership firm into company, the purpose can be solved

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sinu k (accounts assistant) (35 Points)
Replied 31 January 2011

Hai.. please give me an answer for the following query

" X Pvt Ltd company want to take over Y a propreitory concern where the director of X Co is the propreitor". Tell me the procedure for taking of the propreitoryship firm.

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 31 January 2011

You cannot convert proprietorship concern into company. However a company can take over the business carried by a sole proprietorship. For this you need to incorporate a company following usual formalities viz., getting the name approval by filing Form 1A and then within 60 days of name approval filing Form 1 for Incorporation alongwith MOA, AOA, Form 18 , Form 32 and Power of Attorney.

However in the main object clause of MOA specify taking over the business of M/s. ....................(Proprietorship name) as one of the main objects. That is sufficient.

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