Conversion of Proprietorship to Private Limited Company
- Affordable Price
- Digital Signature & DIN for Directors
- Name Search Approval
- Company PAN Card
- MOA/AOA
- Fast & Online Process
- 100% Customer Satisfaction
- Ideal for Growing Businesses
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Proprietor to Private Company Conversion Procedure
Complete the Conversion of Sole Proprietor Application Form
Provide us Pertinent Documents
Make an Online Payment
Our executive will manage the Application process for Conversion of Sole Proprietor
We will mail you a Certificate of Incorporation
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Conversion of Sole Proprietor to Private Limited Company
A proprietorship, also referred to as a sole proprietorship, is a business that
is run by only one person. As a single proprietorship is run by one person, there are no issues
with management of such a business.
You can convert your proprietorship to a private limited company if your firm grows and your
liabilities do as well. An individual must have or engage into a formal agreement for the
conversion process in order to proceed, which is a difficult and drawn-out process, so you can
seek the assistance of a legal advisor from LegalRaasta.
Minimum Requirements for Conversion
- ✔ DPIN & DSC for all Partners.
- ✔ For Conversion, there must be at least two shareholders and two directors.
- ✔ Two directors are required, of whom at least one must be an Indian resident.
Documents Required for Conversion of Proprietor to Private Company
A copy of each proposed partner's PAN card.
Passports, election cards or voter identity cards, ration cards, driving licenses, and Aadhaar cards are all acceptable forms of address or identity proof for Indian citizens not more than 2 months old.
The Partner's Ownership Proof must include no more than 2 months old Electricity Bills, Telephone Bills, Gas Bills, Mobile Bills, or any other utility bills from the company location.
For Digital Signature Certificate we required two most recent passport photos.
All directors and members must provide the most recent bank statements no older than two months.
If a rented premises agreement or property papers are required, a copy of address proof is required.
The landlord NOC should be in given downloaded PDF format.
Conditions for Conversion of Proprietor to Private Limited Company
- ✔ The business receives ownership of all of the proprietorship's assets and liabilities.
- ✔ The individual sole proprietor's ownership stake should be at least 50%.
- ✔ The ownership of the shares must be valid for five years.
- ✔ The sole proprietor cannot get any benefits relating to the allocation of shares.
- ✔ The proprietorship firm and the corporation must execute a sale agreement or takeover agreement.
- ✔ According to the MOA, one of the company's goals must be to acquire the sole proprietorship's business.
Procedure for Conversion of Proprietor to Private Limited Company
1. Formalities for a Slump Sale
The owner must follow all slump selling requirements.
2. Apply for DIN and DSC
The applicant must then apply for a Director Identification Number (DIN) and a Digital Signature Certificate (DSC).
3. Verification of company name
The company name is checked and verified in this step to ensure that it complies with the Ministry of Corporate Affairs' (MCA) requirement.
4. Draft the MOA and AOA
Next, the proprietor must draft the Memorandum of Association and the Articles of Association.
5. Filling out the Form
The applicant would file the application form to obtain the certificate of incorporation once the name of the company had been approved by the appropriate authorities.
6. Document Submission
After completing the aforementioned steps, the applicant must submit all necessary paperwork to the MCA.
7. Company Incorporation
The MCA and Registrar of Companies will issue the company's certificate of incorporation after confirming the procedure.
8. Update a bank account
The next step is to update a bank account in the company's name to manage day-to-day operations on the organization's behalf.
9. Apply for a PAN and TAN Number
The applicant must now apply with the necessary authority for a PAN and TAN number.
Benefits of Conversion of Proprietorship into Company
Limited Liability
The status of being legally responsible only for a limited amount of a company's debts. As a result, where a company is limited by shares, the members' liability on a winding-up is limited to the amount unpaid on their shares. This means that if you have no balance payable on the number of shares you own, you are not liable to the company for any debt or credit amount that remains unpaid.
Fund Raising
In India, the only type of business that can raise funds from Venture Capitalists or Angel Investors is a Private Limited Company.
Perpetual Succession
This refers to the idea that even after a proprietorship business dies, the entity will continue to exist; however, it is not applicable to private limited companies. Even if a particular employee left, the business would continue to run.
Better Reputation
Compared to a sole proprietorship business, a private limited company would unquestionably have a better reputation. Due to its registration with the MCA, this registration will increase the company's reputation in the public's eyes.
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