It is also suggested to convert the Partnership Firm into a private limited company, if the scale of operation is expanding and also if it is becoming difficult to control the management of the firm and the partners wishes to limit their liabilities and secure their personal assets. Conversion of a Partnership firm into Private Limited Company requires complying with the requirements of Part IX of the Companies Act. Generally registration of partnership firm is not mandatory but the process of conversion becomes very difficult if the firm is not registered. Â Pre conditions to be fulfilled Some basic requirements that should be complied with before the procedure of registration begin:
- Minimum Seven Partners required;
- Minimum Share Capital shall be Rs.100000;
- Firms’ paid up capital or authorized capital is to be divided into shares;
- Profit sharing ratio should be on the basis of capital employed by partners;
- The object clause of memorandum (to be drafted) should permit the new company to acquire the business and the assets and liabilities of the partnership firm.
 Steps for incorporation 1)     Ensure that the firm is registered with the Registrar of Firms. 2)     A meeting of the partners is to be held and assent of majority of the partners is required for purposes which includes deciding the name of the proposed company, to authorize at least one of the partners to register all the documents with the registrar of companies, to prepare a supplementary partnership deed which should include the basic contents of object clause of Memorandum of Association. 3)     Memorandum of Association and Articles of Association is to be drafted. 4)     Application of name approval should be obtained by filling Form 1A with the following documents:
- Certified true copy of the partnership deed, latest balance sheet
- Consent of all the partners for the conversion
- Certified true Copy of the resolution passed by the firm in this regard.
5)Â Â Â Â Â After getting the name approved, Form 18 and Form 32 is to be filed with the registrar along with two sets of Memorandum and Articles of Association of the Company. 6)Â Â Â Â Â Thereafter Form 1 along with Form 37, 39, 40 & 41 is to be filed. 7)Â Â Â Â Â All the partners and other persons intending to become director should apply for DIN (Director Identification Number). 8)Â Â Â Â Â At least one directors should have DSC (Digital Signature Certificate) 9)Â Â Â Â Â Declaration by two partners that the documents submitted have been verified. 10)Â Â Filling Fees. Â On completion of the formalities and upon the satisfaction of the registrar, the Certificate of Incorporation will be issued by the registrar. Please Contact Us for any assistance in formation of partnerships or any other issues relating to accounting, auditing or any such matters.
why seven partners are required for conversion of partnership firm into private limited company?
Sweta,
The requirement is as per the law.
Alok Patnia
Founder & CEO at Taxmantra.com
HOW MUCH TIME & COST IS INVOLVED IN CONVERSION OF PARTNERSHIP FIRM INTO A PRIVATE LIMITED COMPANY. COULD YOU TAKE UP THE ASSIGNMENT? HOW MUCH WOULD BE YOUR PROFESSIONAL FEES AS WELL.
Thanks Mr. Hiral Shah for your message. We would certainly assist you in the same.
Please provide us your contact details or call us at +919230033070 OR 03340060473
or mail us at – info@taxmantra.com
Alok Patnia
Founder and CEO at taxmantra.com
Sir,
We are only 3 parners if there is is any option to convert over parnership firm into a private ltd company.
Our Capital is 2500000. And we try to invest more. And our business is growing to other states. So can u suggest any legal options for it
i expect your reply
yours faithfully
jisha
Thanks Jisha for your message. We would certainly assist you in the same.
Please provide us your contact details or call us at +919230033070 OR 03340060473
or mail us at – info@taxmantra.com
Alok Patnia
Founder and CEO at taxmantra.com
sir,
we have only 2 partners, so is it first require to increase it to 7?
i expect your reply
yours faithfully
Nirav
Hi,
No. in case of Pvt. Ltd. Co. the minimum directors required is 2. Hence, the 2 persons who are already existing as the partners need to become Directors of the company. Having more than two directors is at your own wish and will.
Thanks and Regards,
Team Taxmantra
Call Us: +91 923 0033 070
Email Us: info@taxmantra.com