Procedure of conversion of p'ship firm into private ltd co.

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Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2015 Hello Expert,

What is the Procedure of conversion of partnership firm into Private Limited Company AS PER COMPANIES ACT, 2013.

please quote relevant sections, rule, chapter , schedule etc.

Thanks in Advance

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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28 January 2015 PROCEDURE FOR CONVERSION:
For the purpose of conversion under Part IX of The Companies Act, the following steps should be taken :-
Step -1- Re-organisation of the firm

The first step towards converting a firm into a company under Part IX is re-organisation of the firm on the lines of a joint stock company. The following steps needs consideration :-
1. The firm should have atleast seven partners.
2. It should have a permanent paid-up or nominal capital of fixed amount divided into shares of fixed amount.
3.
The partners should be holders of these shares as members of the joint stock company with each member holding specific number and amount of shares.
4.
A deed of partnership evidencing existing partnership of seven partners on normal lines and registered with the registrar of firms is necessary.
5.
A deed of Co-partnery/Partnership should be drawn showing number of shares, percentage of shares and paid-up capital held by each partner as a member of the joint stock company alongwith other necessary clauses like making Memorandum and Articles of Association a part of the instrument as also balance sheet of the firm made out on a date not more than six clear days before delivery of documents for registration.
Step -2- Name Approval

The firm should obtain approval of the name with which it wishes to register itself following usual procedure of filing Form No. 1A prescribed under the Companies Act. The intention of registering the firm under chapter IX of Companies Act should be mentioned in Form No. 1A and a copy of the partnership deed is also required to be enclosed.
Step-3- Preparing Memorandum and Articles of Association

Memorandum and Articles of Association should be prepared incorporating certain special clauses like inclusion of co-parcenery deed, balance sheet, paid-up capital of the members, vesting of the assets and liabilities of the firm in the company etc. and should be got printed. All the partners/members should sign the same in usual fashion.
Step-4-Prepration of other forms
Apart from the usual Form nos. 1, 18 and 32, the following forms should be prepared:
1. The application for registration in Form no. 37
2.
List of members of the company with names, address, occupation, number of shares held and its distinctive numbers made upto a date not more than six clear days before delivery of the documents for registration. The relevant Form is Form no. 39.
3.
In Form no. 40, a statement specifying certain particulars like nominal share capital, number of shares taken etc. is required to be given.
4.
Copy of the resolution by members giving their assent for registration of the joint stock company as a company with limited liability under the Companies Act, 1956 in Form 41.
Step-5-Filing of the documents
The following documents are required to be filed for registration along with necessary fees :
1. Memorandum and Articles of Association duly stamped and signed.
2. Forms no. 1, 18, 32, 38, 40 and 41.
3. A certified copy of the instrument of co-partnership.
4.
A copy of the balance sheet and profit and loss account made up to a date not more than six clear days before filing of the documents for registration duly certified.
5. A copy of the resolution assenting for registration signed by all the members.
6. Copy of the name approval letter.
7. Power of attorney to carry out correction etc.
Step-6- Power of Registrar to call for evidence

The Registrar of Companies may call for such evidence as he may think necessary to satisfy himself about the genuineness of the joint stock company. For example, he may call for a normal deed of partnership and a copy of the registration with the registrar of firms.
Step-7-Certificate of Incorporation

After all the formalities like rectification of the documents etc. are completed, the Registrar of Companies shall give certificate of incorporation of the company under Part IX of the Companies Act, 1956.

for more info:

http://taxbymanish.blogspot.in/2011/09/tax-planning-by-conversion-of-firm-into.html

Querist : Anonymous

Querist : Anonymous (Querist)

29 January 2015 Thanks Mr. Ramesh Varma.

Why seven partners are required to covert partnership firm into Private Limited Co.

I think there should be minimum two partners are required.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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29 January 2015 it Means The declaration clause should be signed by at least seven persons in the case of a public company and by two persons in the case of private company.

Sharad

Sharad (Expert)
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03 December 2016 Under companies act 2013, conversion of partnership firm into private limited is governed by section 366 to section 374 read with Companies (Authorised to Register) Rules 2014. Application for conversion has to be made in form URC-1

For more details check this video https://www.youtube.com/watch?v=HGCdFJ_QZV0