Relevant Sections / Rules – Part XXI of the Companies Act, 2013 read with Companies (Incorporation) Rules, 2014

Requirements:

a) Registered Partnership firm with minimum 2 or more Partners

b) Minimum Share Capital shall be Rs. 100,000 (INR One Lac) for conversion into a Private Limited Company

c) There must be provision in the Partnership deed for converting the firm into Company

d) There must be an agreement between the partners to convert the firm into Company.

d) If the above requirement is not fulfilled by the firm, then the Partnership deed should be altered

e) Minimum 2 Shareholders and Directors. However, Directors and shareholders can be same person.

h) Director Identification Number (DIN) for all the Directors.

i) Digital Signature Certificate (DSC) for two of the Directors.

Procedure of Conversion

1. Hold a meeting of the members

 Hold a meeting of all the partners of Partnership Firm and take assent for the conversion from its partners. 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.

2. 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.

3. 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.

4. 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.

5. Affidavit

File an affidavit, duly notarised, 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.

6. 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 alongwith 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

Clarification in respect of registered office of the Proposed Company post-conversion –

There is no restriction upon the location of registered office of the proposed company after getting converted from partnership firm under the Companies Act, 2013. Proposed company may opt for different address for its registered office other than the address of the Partnership firm before conversion. Further, owner of the registered office of proposed company should also provide No Objection Certificate in favor of such proposed company to use the premises as a Registered Office by the proposed company. However, it may also be noted that, all the partners of the firm should also provide the consent with requisite majority in their meeting held for conversion of firm into private limited company in respect of details of address of the registered office of the company post-conversion so as to avoid future disputes.

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