Convert Partnership Firm into Private Limited Company

Conversion of Partnership firm into a Private Limited Company is a good option for anyone who wishes to expand small and medium scale enterprises to a large scale one, or for infusion of equity capital.

Benefits of Conversion

♦ Limited liability as compare to partnership firm

♦ Easy access to funds i.e. Borrowing for expansion from Banks and financial institutions

♦ Increase Capital base of company

♦ Transferability of shares i.e easier changes and alterations in shareholding and also issue share capital by many ways as per rule of companies law,2013

♦ No capital gain tax on transfer of property from partnership firm to Private Limited Company

♦ No stamp duty on transfer of property from partnership firm to Private Limited Company

♦ As per income tax point of view i.e loss and unabsorbed depreciation of firm now as loss/depreciation of the proposed company and this loss can be carried for next 8 years of the proposed company.

Law applicability

♦ Section 366 to 374 of Companies Law, 2013

♦ Companies Amendment, 2017

♦ Company Incorporation Rules ,2014

For Conversion

1. Hold meeting of partners to take their mutual consent for conversion and to authorize 2 or more partners to execute all required step for conversion

2. Capital which was as contribution of partners divided into units

3. Apply for Name Approval through RUN and upload required documents with the registrar of Companies within 20 days from the date of name approval.

4. Publish an Advertisement in Two Newspaper (English & Vernacular) in Form URC – 2 within 21 days from the date of publication of this notice.

5. Form URC -1 conversion form with necessary documents within 30 days of name approval.

6. Form – 22 verification of registered office within 30 days of Incorporation.

7. File Incorporation forms through SPICE+ with PAN, TAN and GSTIN (AGILE) and MOA and AOA in single window (See new notification for the same)

8. File E-form INC – 7 (Application for Incorporation) for giving details about all directors and subscribers of the converted company.

9. Declaration by Professional – E form INC -8 {as attachment of INC -7}

10. Required E-form INC -9 (Affidavit from the Subscribers) {as attachment of INC -7}

11. File E-Form DIR -12 (Appointment of First Directors)

12. NOC from the owner of the property.

13. Proof of Office address (Lease deed/ Rent Agreement)

14. Copy of the utility bills (not older than two months)

Attachments for Form URC-1

♦ SRN of RUN i.e. name approval form already filled to ROC

♦ Particulars of Partners and Shares held by them;

♦ Affidavit duly notarized from all the partners for dissolution of the firm ;

♦ Declaration by 2 directors i.e. DIR -2 ;

♦ Copy of the Partnership deed with all revised deeds till date ;

♦ Copy of Newspaper advertisement i.e URC -2 ;

♦ Certificate from a CA/CS/CWA certifying the compliance with all the provisions as applicable for this conversion

♦ A copy of latest IT return;

Important Notes:

♦ After conversion apply for all changes in name from Firm to Private limited company like sign board , letterheads also in government and non-government authorities