What are the points we suggested to client to convert its propietrship firm into pvt. ltd. co. ?
3 Replies
Yogesh Shah
(Managing Corporate Finance)
(1051 Points)
Replied 27 March 2010
Hi Tushar,
First of all let
Second, make him aware that there are lot of provisions of ‘reporting to ROC’ in co. whereas in proprietorship there are no such provisions. If he is in a position to do so, then only suggest him to opt for co. way because I have seen many such directors who are unaware of such reporting provisions and come to us (CA / CS) at a last moment and pay heavy penalties.
Third, suggest him to keep authorized capital to the extent of required only. Since, all penalty kinda provisions in ROC are based on authorized cap.
Later, if I assume that you have explained him the difference between both the entities, he will automatically understand how to operate co. and handle other daily matters.
Last but not least, suggest him to form private co., subject to his choice, since comparatively there are more favors to pvt.
Rasesh
(CS CWA MBA (Fin) B.Com LL.B (Spl))
(6501 Points)
Replied 30 March 2010
There is no direct way to convert proprietorship into private limited company. Part IX allows conversion of partnership into public limited company only.
Yogesh Shah
(Managing Corporate Finance)
(1051 Points)
Replied 31 March 2010
Hi Rasesh,
I posted my reply on the same assumption that said proprietor wants to FORM A NEW CO. and not to convert it in co.
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