Conversion of proprietorship business into partnership business
abhishek jha
abhishek jha
From: abhishek jha <akj...@gmail.com>
Date: Mon, Apr 23, 2012 at 11:18 AM
Subject: Conversion of proprietorship business into partnership business
To: csmy...@googlegroups.com
Dear Friends,
CS Riju
Dear Members,
Greetings !!!
A proprietary firm can't be converted into a Private Limited Company, as it requires atleast two members to form a company, unlike the proprietary firm it requires single person. It is advisable to incorporate a new Private Limited with similar objective of the proprietary firm and then take over all the assets and liabilities & business of the proprietary firm (or) we can incorporate a new Private Limited Company with an objective to take over all the assets and liabilities & business of proprietary firm. All provisions for incorporating a new private limited company will apply.
Steps for incorporation of company under part IX:
1. Hold a meeting of the partners to transact the following business
• Assent of majority of its members as are present in person or where proxies are allowed, by proxy, at a general meeting summoned for the purpose of registering the firm under Part IX of the Companies Act, 1956. Since the liability of the members of the firm is unlimited, when a firm desires to register itself as a company under Part IX as a limited company, the majority required to assent as aforesaid shall consist of not less than ¾ of the members as are present in person or where proxies are allowed, by proxy, at a general meeting summoned for the purpose.
• To authorize one or more partners to take all steps necessary and to execute all papers, deeds, documents etc. pursuant to registration of the firm as a Company.
• To execute a supplementary Partnership Deed to align it with the requirements as under:
• There must be at least 7 partners in the partnership firm;
• The firm may be registered with the Registrar of Firms;
• There must be a fixed capital divided into units;
• There must be provision of converting a firm into company.
• There must be an agreement by the partners to convert the partnership to a company. This can be done by a contract in writing to this effect to which the partner’s resolution for conversion can be attached as annexure.
• Execute a settlement deed.
2. Application for Director’s Identification number and digital signature certificate
3. An application in Form No. 1A
4. File Form-1, 18 & 32
5. Form No. 37 along with Form No. 39.
6. Once the new company is formed, the takeover agreement would be entered between the Partnership Firm and the newly incorporated company.
7. Convene a Board Meeting after giving notice to all the directors of the newly incorporated company immediately after incorporation as per section 286 of the Companies Act, 1956 to adopt the agreement entered into by the company and the partner of the firm for the acquisition of business of the firm.
In such a situation, the entire business of the firm along with all its assets and liabilities is transferred to the company.
Conversion of a Proprietorship Business into Private/Public Company
1. While filing Form 1A, the latest balance sheet with other documents is to be attached. An affidavit on stamp paper from the prop. that the firm will shut down after this incorporation.
2. The first clause of the Moa will indicate the takeover of firm by the company.
3. File F-1A.
4. Get Name approval
5. File F-1, 18, 32
6. Obtain Certificate of Incorporation.
7. Hold a Board meeting for transacting businesses required to be transacted in 1st Board Meeting in addition to take over the business of Proprietorship firm and proceed to allot shares.
For knowledge purposes only.
Regards,
CS Riju
Heights by great men reached and kept were not obtained by sudden flight, but while their companions slept, they were toiling upward in the night.
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