PARTNERSHIP TO PRIVATE LIMITED COMPANY CONVERSION

• The incorporation of a Private Limited company is more transparent than other business entity. Private Limited Company has its own advantages such as Limited Liability, Perpetual Succession, and easy approach to funds, which a Partnership firm does not have.

• The Private Limited Company has the status of a separate legal entity that a Partnership firm does not have.

• Private Limited Company has Limited Liability. But, in the case of the Partnership firm, partners are personally liable for every debt.

• In private limited company the ownership gets transferred if the shareholders provide their consent. However, in the case of a Partnership Firm, the partner cannot transfer its share without referring to the Partnership deed.

• Private Limited Company has much compliance as compared to Partnership firm.

A Partnership firm needs to fulfill the following requirement for its conversion into private limited company:

• Minimum no. of two or more directors and shareholders

• Minimum share capital contribution of Rs. 100,000

• Partnership firm should have its partnership deed with the provision mentioning the conversion of the partnership firm into limited company

• If the partnership deed does not have the provision regarding the conversion then the partners should have to alter the deed

• Agreement between the partners regarding to the conversion of firm into limited company

• No objection certificate (NOC) from the all secured creditors of the partnership firm

• Address proof of the registered office

• Directors Identification Number (DIN) of all the directors

• Digital Signature Certificate (DSC) of all the directors

• Preparing of Memorandum of Association (MOA) and Article of Association (AOA)

1. Conducting a meeting of the members
   To convert a firm first, the partnership firm need to hold a meeting of all the partners of its firm. The consent of the majority number of partners needs to be taken in the meeting. At least three-forth number of the partners should be present in the meeting. Also the authority to sign or take any other necessary action regarding the conversion process of the firm should be given to any two or more than two partners of the firm.

2. Consent from the secured creditors of the firm
   The partners of the firm should get the written consent from the secured creditors of the firm before the conversion.

3. Obtain the Name Approval of the Proposed Company
   Next the partners need to file an application with the Registrar of Companies to obtain the name for the proposed company after conversion, with the attachments stating the fact that the partnership firm is proposed to be converted into a private limited company.

4. Publish an Advertisement in Two Newspaper
   As per the clause (b) of section 374 of the companies Act, 2013 firm opting for registration should publish an advertisement about registration. The said advertisement shall be in Form No. URC- 2, which shall be published in two newspapers, one in the English and the other in the principal vernacular language of the district in which office of such firm situated and should be circulated in that district.

5. Affidavit
   In next step the partners need to file an affidavit, need to be duly notarized, from all the partners to provide that in the event of registration, all the necessary documents or papers shall be submitted to authority with which the firm was earlier registered, for its dissolution as partnership firm accompanying to its conversion into private limited company.

6. Filing of forms with ROC
   In the last, partners need to file the necessary form SPICe+ along with the MOA and AOA of the firm with registrar of the company for the approval of conversion and for registration of firm into the Private Limited Company along with all the necessary attachments which specifies the fact of conversion. If the registrar is satisfied with the application and no objection were raised then the registrar will issue the certificate of incorporation to the company.