Conversion of Partnership Firm into Private Limited Company

The Partnership business is frequently transformed into a Private Limited Company to reduce responsibility and gain from a Private Limited Company. The danger of responsibility is reduced when a partnership firm is transformed into a private limited company, which is treated like a separate legal entity and in which personal assets are protected until fraud occurs. A Pvt Ltd Company Registration is formed by the Companies Act of 2013, and its shares are kept private.

What is Required in the Conversion of a Partnership Firm into a Private Limited Company?

The following are the necessary prerequisites to changing a partnership into a private limited company:

• For the conversion of a partnership firm into a private limited company, there must be a minimum of two directors and shareholders.
• The Partnership Deed is required to be registered with the company's registrar.
• The partnership firm's secured creditors must be approached for the No Objection Certificate.
• The partnership company needs to come up with a special name that ends in Pvt. Ltd.
• The required minimum capital contribution should be made.
• The partnership firm should have a registered office.
• The company should create its MOA and AOA for incorporation after finishing the necessary conversion procedure.

Difference between a Partnership Firm and a Private Limited Company 

Private Limited Company	Partnership Firm
A Private Limited Company is a separate legal entity	A partnership firm is not a separate legal entity.
Private Limited Companies apply Limited Liability	In a partnership firm partners are personally responsible for all debts.
The ownership can be transferred if the shareholders agree.	Partner cannot transfer their share without referring to the partnership deed.
It can not be wound by anyone or shareholders.	It can be dissolved by anyone or by partners.

Advantages of conversion of partnership firm into a private limited company

• Shareholders are only partially liable.
• Raising money.
• Distinct legal entity.
• Diversification and Expansion.
• Shareholding and management changes can be made without disrupting the company's operating procedures.
• Outsiders cannot gain control of the business.
• Assets and obligations are transferred.
• The private business enjoys unending succession.

Documents needed in the conversion of the partnership firm into a private limited company

The list of paperwork needed to change a partnership firm into a private limited company is as follows:

Required Documents For E-Form URC-1

• Information on the members includes each person's name, address, and profession as well as information about the shares they each own.
• In particular, the company's original directors.
• A declaration that he is not prohibited from serving as a director under Section 164 signed by all of the First Directors (1). To the best of the applicant's knowledge and belief, all of the information contained in the documents submitted to the ROC for the incorporation of the company is correct and true.
• Information about the partners in the partnership firm, including identification and address documentation.
• Copies of partnership agreements Additionally, copies of the primary and all changed deeds if the Partnership deed has been modified in the past. The certificate of registration given by the Registrar of Firms is also necessary if the firm is registered.
• A partnership firm's statement of assets and liabilities, properly attested by a practicing chartered accountant, must be made no sooner than 30 days after the submission of form URC-1.
• All of the partnership firm's tax-related documentation.
• a duplicate of the newspaper ad
• All of the applicant company's secured creditors have signed a letter of no objection.
• The majority of Partners consent.

A declaration detailing-

1)The company's nominal share capital,

2)The total number of shares,

3)The number of shares purchased, and the price per share

4)The name of the business with the phrase "Private Limited" added.

Documents Necessary For The Spice+ Form

• DIR-2 Declaration from the First Directors, 
• Copies of the Shareholders' and Directors' Identification and Address Proof, 
• NOC from the Property Owner,
• Proof of Commercial Address (Rent Agreement or Lease Deed), and 
• Copies of the Utility Bills (not older than two months)

Converting a partnership firm into a private limited company:

The following actions must be taken to convert a partnership firm into a private limited company:

Step 1: Conduct a meeting of the partners to convert the partnership firm into a private limited company.

A majority of the partners must agree, and at least 3/4 of the partners must be in person.

to permit two or more partners to conduct the necessary actions and to carry out the documentation and conversion process.

Consent of the Secured Creditors: Before conversion, the partners must get the firm's secured creditors, if any, written consent.

For all proposed directors and shareholders of the company, submit DSC and DIN applications. To apply for DSC and DIN of the proposed directors and shareholders is one of the requirements.

Step 2: In the RUN form, get name approval.

To get the planned firm after conversion incorporated, submit an application using the RUN form on the MCA website.

A partnership business may apply for the same name as long as it complies with the 2014 Companies Incorporation Rules' requirements for uniqueness and is available.

The proposed director or shareholder must submit the conversion of the partnership firm proposal along with any required attachments.

Step 3: Submit Form URC-1

Within 30 days following the approval of the name, submit Form URC-1 to ROC together with any required attachments.

Step 4: Post an Ad in Two Newspapers

A firm choosing incorporation under the terms of Part I of Chapter XXI must post an advertisement about incorporation by section 374(b) of the Companies Act, 2013.

Ads must be written in Form No. URC-2. Additionally, the advertisement must appear in two newspapers:

One is in English, and the other is in the district's primary vernacular.

Step - 5: Draft MOA and AOA

The applicant firm is needed to draft the Memorandum Articles of Association and other pertinent documents necessary for Incorporation once the Registrar has accepted the Name and E-FORM URC-1.

Step 6: Issuance of the Certificate of Incorporation

If the Registrar is pleased with the documents and information submitted by the applicants, submit SPICEs along with the necessary paperwork. The applicant company will receive a COI (Certificate of Incorporation) from the Registrar.

Our Role in Obtaining the Conversion of a partnership firm into a private limited company

• Our consultants will educate you concerning every aspect of the conversion of a partnership firm into a private limited company. Including how to get it.
• JR’s skilled consultants will assist you in filling out the application form for obtaining a conversion of a partnership firm into a limited company.
• We will ensure a smooth procedure by ensuring proper documentation and evaluation. 
• The professional consultants of JR Compliance will provide you with proper guidance during the registration procedure.
• In case of queries, we will provide you with the best possible solution for your concerns regarding conversion.

Conclusion

To conclude, JR Compliance can assist you in obtaining the conversion of a partnership firm into a company by ensuring proper documentation, evaluation, testing, etc. Moreover, to make our client understand each aspect of it, we will educate you regarding the same.

In addition, late document submission, or filling in false information in the application form can delay the process.

Thus, to avoid such inaccuracy contact our expert and experienced team immediately for professional assistance and support in the convert partnership firm to a private limited.