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There is a partnership firm that requires to be converted into a Private Limited Company. The partnership firm initially had 2 members. A partnership firm to be converted into a company require 7 members. So my question is, do all of these members mandatorily require DIN?? Or is it enough if two of the members have DIN, as it is a Private Limited Company?

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Ajay Mishra (Company Secretary) (74342 Points)
Replied 31 October 2013

No for members no need to have DIN. But yes for incorporation a private limited company, it is required to have minimum two director DIN.

Ajay Mishra (Company Secretary) (74342 Points)
Replied 31 October 2013

PROCEDURE FOR CONVERSION OF PARTNERSHIP FIRM INTO A LIMITED COMPANY

After having decided to form a company to take over the business of their partnership firm, the partners should take the following procedural steps for the formation and registration of the company:

1. An existing business of partnership can be converted into a company in any of the following ways:

(i) by outright sale;

(ii) by making partners of the firm the only shareholders of the newly incorporated company;

(iii) a company becoming a partner of the firm which will be disclosed thereafter;

(iv) by amalgamation under section 391 to 394 of the Companies Act, 1956;

(v) by registration of existing joint stock companies under section 567 of the Companies Act, 1956

2. In case of above items (i), (ii) and (iii), following procedure should be followed:

a. The existing business should be converted into a partnership firm and the newly incorporated company be admitted as its partner.

b. At the time of forming the new company, it should be ensure that the proprietor of the existing business and any other individual are the subscribers to that company’s memorandum of association, thereupon that other individual must also be admitted as a partner of the converted firm.

c. Distribution of all assets and liabilities of the firm to one of the partners who will pay the difference to other partners must be provided in the partnership deed.

d. It must be ensured that the memorandum of association of the newly formed company includes a clause permitting the company to acquire the undertaking of an existing business.

e. It must be ensured that the articles of association of the newly formed company give power to its directors to enter into agreement facilitating the acquisition of business.

f. An agreement with the directors of the newly formed company for facilitating the acquisition of the partnership firm must be entered into.

g. A copy of the agreement must be filed with the Registrar within 30 days of entering into the agreement (section 192), after paying the requisite fee as prescribed under schedule X to the Companies Act, 1956.

h. Thereupon a Board Resolution for allotment of shares to the other partners of the firm as consideration of such acquisition should be passed.

i. A return of allotment in e-form-2 along with the attachment should be filed with the Registrar within 30 days of making the allotment as per section 75 of the Companies Act, 1956.

3. If the partnership firm being a joint stock company within the meaning of section 566 wants to be registered as a company, then all the following documents should be delivered to the Registrar of Companies:

(i) an application in electronic Form-37

(ii) a list showing the names, address and occupations of all persons who on a day not more than 6 clear days before the day of registration where members of the company and the shares or stock held by each one of them respectively, distinguishing each share by its number in case the shares are numbered;

(iii) a copy of the partnership deed;

(iv) a statement containing the following particulars:

(a) the nominal share capital of the company and the number of shares into which it is divided or the amount of stock of which it consists;

(b) the number of shares taken and the amount paid on each shares;

(d) a copy of the resolution declaring the amount of guarantee if you want to register it as a guarantee company (Section 567).

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