Partnership Firm into Pvt. Ltd. Company
The main advantage of a Private Limited Company registration is that it has the status of a separate legal entity that a partnership firm does not have. Private Limited Company is limited liability, whereas every debt is legally responsible in the case of partnership firm partners. The Private Limited model is more transparent than other processes of business. PLC has its own benefits, such as limited liability, continuous transfer of power, simple access to funds, etc.
By transforming a partner company into a private limited company, which becomes a separate legal entity, the possibility of liability is minimized and, even in the case of fraud, personal assets will remain untouched. A private limited company's incorporation and compliance process is according to the Companies Act, 2013, and the shares are owned privately.
Advantages of Partnership Firm Conversion into a Private Limited Company:
Raise funds more quickly
It is a reasonably easy job to raise funds as a private limited company as it offers an incentive to raise shares and has many avenues of raising funds in the form of private equity and banks and financial institutions.
Owners' Limited Liability
The company's commitments or debts do not impose a tax on the personal assets of the owner. Their responsibility shall be limited to the underwritten money unpaid by them only.
Separate Legal Existence
A private limited company is licensed, a legal body, independent from its owners and managers, is born in the eyes of the law. The business can operate on its own behalf by opening a bank account to own assets and entering into a contract.
Necessary documentation for the conversion of a partnership company into a private limited company:
PAN Card Card
PAN Shareholders And Directors Card. International nationals have to provide a passport.
Evidence of Identification
Voter ID/ Passport/ Shareholders and Directors' Driving License
Telephone Bill/Electricity Bill/Shareholders And Directors' New Bank Account Statement
New Passport Size Photograph Of Shareholders And Directors
Proof for Business Address
Address of the Registered Office's Current Energy Bill/ Telephone Bill
Duly Approved Copy of New Final Statements Audited
Copy from the ITR
The Partnership Company has sent a copy of the new income tax return.
Deed of Collaboration
Copy of the deed of partnership to be issued
Process of conversion of partnership firm into private limited company:
- Digital Signature Certificate program
- Checking availability of names
- Request under 'RUN' for Name Reservation
- Name reservation
- Drafting of MoA, AoA & other documents needed
- Charge for Stamp Duty
- Notarization of documents needed
- Filing out requests for company registration
- Request for DIN Allotment
- Company Application for PAN and TAN
- Production time by Government
Partnership Firms Vs. Private Limited Company
The benefits of turning the Partnership Company into a Private Limited Company are that the Private Limited Company retains the status of a separate legal entity that it does not enjoy.
Private Limited is a limited liability company. In the case of the partnership company, however, partners are individually responsible for all debts.
It is more open than other corporate models to form a Private Limited company. Private Limited Company has its benefits such as Limited Liability, Permanent Succession, quick access to assets, etc. that are not owned by the Partnership Company.
If the shareholders give their permission, the ownership gets transferred. However, in the case of a Partnership Company, without referring to the Partnership Deed, the partner cannot move its share.
In contrast to Partnership business, compliances are much in Private Limited Company.
If you want to turn a partnership company into a corporation by creating a new business, then you can:
(a) Make all your partnership firm's partners become subscribers to the association's note. Only the owners of the new company remain.
(b) Create a new partnership and identify the new company as one of the partners of your current partner company.
(c) The process laid down in section (7) of the Companies Act 2013 is for the establishment of a new company to be followed.
Specify a memorandum of management in the object clause. There is a specific clause for a newly registered company. Which allows the new company to acquire the company? The partner firm's assets and liabilities have been converted.
Specify in the objects of the newly-registered company association. The authority of directors to conclude agreements and to adopt agreements. This relates to the acceptance of the undertaking. It also has the assets and liabilities of a partner company.
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Frequently Asked Questions
Yes, in SPICE +, DIR-2 is mandatory. It is the consent of the business entity to act as a director.
Yes, it is mandatory that all companies registered under the MCA file their annual returns annually with the ROC in question.
- Appointment of a minimum of 2 directors, of which one must be an Indian resident.
- Requirement of a minimum of 2 shareholders for this registration. In addition, at the same time, an individual may become a shareholder and a director.
- As a regd, a place of business in India must be given. Address of the office