Applicability of Law(s):

  • Chapter XXI, Part A
  • Section 366 to 374 of Companies Act 2013
  • The Companies (Authorized to Registered) Rules, 2014.

 Mode(s) / Method(s) of Conversion:

  • Form a New Company as per prescribed under Companies Act 2013 with Conversion form.
  • Prepare Execution deed to transfer the business together with all the assets and liabilities.

Note* : There must be provision in the Partnership deed for Conversion.

 Requirements for Conversion:

  • Partnership firm to be registered with the Registrar of Firms
  • Minimum 2 Partners
  • Amend Partnership deed – Add clause for conversion in deed, if required
  • All partners of the partnership firm shall become shareholders of the company in the same proportion in which their capital accounts stood in the books of the firm on the date of the conversion.
  • Consent of majority of members by calling a general meeting for conversion.

Steps for Conversion:

1. Hold a meeting of the Partners to transact the following business:

  • To authorize one or more partners to take all steps necessary and to execute all papers, deeds, documents etc. pursuant to registration of the firm as a Company.
  • To execute a supplementary Partnership Deed to align it with the requirements as under:
  • There must be at least 2 partners in the partnership firm;
  • The firm may be registered with the Registrar of Firms;
  • There must be a fixed capital divided into units;
  • There must be provision of converting a firm into company;
  • There must be an agreement by the partners to convert the partnership to a company. This can be done by a contract in writing to this effect to which the partner’s resolution for conversion can be attached as annexure.
  • Execute a settlement deed.

2. Approved for the draft of the advertisement to be given in the form URC 2 in the Newspaper.

3. There should not be revaluation of the assets in the previous preceding three  years.

4. Obtain the Digital Signature Certificate

5. Obtain DIN in Form DIR – 3

6. Apply for Name in ‘Reserve Unique Name (RUN)”

7. Publish an advertisement in E-form URC -2 about registration in two newspaper (English daily & Vernacular) for seeking any objection within 21 days of Publish.

 8. A company after obtaining availability of name in terms of the provisions of section 4 of the Act, shall attach the required documents and information to the Registrar along with Form No. URC-1 (Conversion Form).

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

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

11. Required E-form INC -9 (Affidavit from the Subscribers)

{as attachment of INC -7}

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

13. INC – 22 (Verification of Registered Office) with in 30 days of Incorporation.

After these formalities:

  • Registrar will register Company and provide Certificate of Incorporation (COI).

Documents Required :

1. For DIN : Signed copy of PAN, AADHAAR & Passport Image

2. News Paper Advertisement in form URC – 2

3. Details required for Filing Form URC – 1

  • SRN of RUN (filed form)
  • Name of Partnership firm / Registration No(if any),
  • Number of Partners,
  • Date of Partnership deed
  • Date of partners resolution
  • Total amount of Property – Secured debt (if any)

Attachments required:

  • Particulars of Partners and Shares held by them;
  • Affidavit duly notarized from all the partners for dissolution of the firm;
  • Declaration by 2 directors verifying the particulars of members;
  • Copy of the Partnership deed;
  • Copy of certificate of registration of the entity, if any;
  • Copy of Newspaper advertisement;
  • Certificate from a CA/CS/CWA certifying the compliance with all the provisions of Stamp Act, to the extent applicable;
  • A copy of latest IT return;
  • Undertaking from Directors for compliance with requirements of Indian Stamp Act, 1899;

Filing – Form SPICE-32, e-MOA and e-AOA

  • Affidavit and declaration by first subscriber(s) and director(s)
  • Proof of Office address (Conveyance/ Lease deed/ Rent Agreement etc. along with rent receipts)
  • Copy of the utility bills (not older than two months) – Resolution of Partners regarding Conversion.

Author Bio

Qualification: CS
Company: S.Srinivasan & Co., Company Secretaries
Location: New Delhi, New Delhi, IN
Member Since: 06 Dec 2018 | Total Posts: 18

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4 Comments

  1. Vijaya says:

    what will be the right process if company is already registered and taking over a prop. Firm being run by one director. If you have done any research plz share. How can this be intimated or registered with the income tax and GST Authorities for transfer of closing stock and input in prop firm name to the pvt ltd company. plz share on my mail also if possible

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