If you business is growing and you are planning to convert your Partnership firm to Private Limited Company in India, find here the advantages, complete procedure, eligibility criteria, documents required and other details.
The most striking difference between a Partnership and a Private Limited Company in India is that in a Partnership, the personal assets of the concerned partners are not protected and the partners are responsible for each debt or liability that is incurred by the business. One of the most important reasons for converting a Partnership firm to the Private Limited Company in India is that Partnership doesn’t have an independent legal existence.
As the business grows, the risks associated with the business also increases. So it is only a smart business decision to convert a Partnership where the partners are personally responsible for what happens with the country to a Private Limited Company and limit the liabilities for all the shareholders. This also increases the legitimacy and credibility of the company. However, the compliance requirements of a Private Limited Company is more elaborate than a Partnership, it is only good for the organizational structure of the growing company.
You can apply for the conversion from a Partnership firm to Private Limited Company in India in simple steps with seedup.in
Reasons you should consider conversion from Partnership firm to a Private Limited Company in India
- Limited liability – The liability of the directors or members of a Private Limited Company is limited to their own actions and their own capital contribution and not the actions of any other members. Even at the time of liquidation, the debts of the company won’t burden the members.
- Separate Ownership and Management – The separate ownership and management ensures that both segments operate smoothly and complete the goals set by them for the collective growth of the company and there is less confusion.
- Independent Legal Existence – In a Partnership, if a partner dies or retires, the partnership will cease to exist and that makes a partnership very unreliable. But this doesn’t happen in case of a Private Limited Company. The private limited company has an independent legal existence and hence allows the company to sue a third party.
- Raising Capital is easier – Private Limited Companies itself has a variety of ways to raise funds like ESOP, private equity. Additionally, limited liability makes raising capital easier.
Minimum Requirements for conversion from Partnership to a Private Limited Company in India
- At least 2 directors have to be appointed, and at least 1 of them has to be a resident of india.
- At least 2 directors are required for registration.
- The private limited company has to have a registered office in India.
List of Required Documents for Conversion of Partnership to Private Limited Company in India
- PAN Card, Aadhar Card, Voter ID Card of all the shareholders and directors.
- Passport (in case of foreign nationals or NRIs)
- Passport sized photos of all the shareholders and directors.
- Electricity/Telephone Bill of all the shareholders and directors.
- Latest Bank Account Statement of all the shareholders and directors.
- Electricity/Water Bill of the registered place of business.
- Rent Agreement of the registered place of business.
- NOC from all the secured creditors of the applicant.
- A copy of the Certificate of Registration duty and Partnership deed verified by a minimum of two partners of the general partnership.
- A copy of the latest ITR filed by the Partnership firm.
Procedure for Conversion of Partnership to Private Limited Company in India with Seedup.in
- Fill the forms – The first and foremost step requires you to fill out the questionnaires and submit the required documents.
- Application for DSC- The next step is to apply and procure the Digital Signature Certificates for all the directors.
- Reservation for Name – The next step is checking for the availability of the name and then reserving it under RUN.
- Drafting of MoA and AoA – The next step is preparing all the documents by drafting the MoA, AoA along with other documents and then getting them notarized.
- Application for Company Registration – After arranging for all the documents, we have to file an application for the company registration
- Application for DIN,PAN and TAN – After the incorporation of the Private Limited Company, applications for the allotment of the DIN, PAN and TAN have to be filed.
This entire procedure with Seedup.in should take around 12- 15 working days.