Convert Sole Proprietorship to Private Limited Company India
Converting a sole partnership to a Private Limited Company India (PLC), you need to submit an agreement between the sole proprietor and the PLC, declaring the transfer of all the assets to the latter.
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Conversion of Proprietorship into Private Limited Company
Initially, when a business is established, the most preferred choice is a sole proprietorship structure because of its low compliance requirements. Once the business grows, it is essential to take steps to limit the liabilities and reduce the burden of compliance on a single person. The best way out over here is to convert proprietorship to private limited company.
For the purpose of conversion of sole proprietor to a private limited company, it is necessary by the promoters of the company to indulge into an agreement which is to be made for selling the business. Further, such conversion from sole proprietorship to Private Limited Company must have clearly mentioned about “the takeover of a Sole Proprietorship Concern” as one of the objectives in its Memorandum of Association.
Benefits of Convert Sole Proprietorship to Private Limited Company India
Separate Legal Existence
Limited Liability of Directors
Documents required for Company registration Online
In India, Private Limited company registration cannot be done without proper identity proof and address proof. Identity and address proof will be needed for all the directors and the shareholders of the company to be incorporated. Listed below are the documents that are accepted by MCA for the online company registration process acceptable.
Identity And Address Proof
- Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
- Scanned copy of Voter’s ID/Passport/Driver’s License
- Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill.
- Scanned passport-sized photograph specimen signature (blank document with signature [directors only])
For the foreign nationals, an apostilled or notarized copy of the passport has to be submitted mandatorily. All documents submitted should be valid. The residence proof documents like the bank statement or the electricity bill must be less than 2 months old.
Registered Office Proof
For online company registration in India, the company must have a registered office in India. To prove admittance to the registered office, a recent copy of an electricity bill or the property tax receipt or water bill must be submitted. Along with the rental agreement, utility bill or the sale deed and a letter from the landlord with her/his consent to use the office as a registered office of the company should be submitted.
- Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill
- Scanned copy of Notarized rental agreement in English
- Scanned copy of No-objection certificate from the property owner
- Scanned copy of sale deed/property deed in English (in case of owned property)
How to- Company Registration Online?
Company Registration Online in India will boost the progress of startups and provide an additional edge over those who have not registered. The Ministry of Corporate Affairs governs the company registration process with rules and regulations framed in accordance with the law.
Conditions to be followed prior converting a sole proprietorship to private limited company
- After incorporating a new private limited company, all the assets and liabilities of the old sole proprietorship will be completely transferred to the company.
- Even after the conversion takes place, the old sole proprietorship will hold 50% of shares in a new private limited company. i.e 50% of the voting rights will be held by a sole proprietorship.
- The old sole proprietor will hold shares for a minimum period of 5 years from the date of incorporation of a new private limited company.
- Similarly, there will not be any monetary consideration between a sole proprietorship and private limited company as it is a mere conversion, not sale.
Step by step procedure for registration
- Step 1: Application for DSC (Digital Signature Certificate).
- Step 2: Apply for the DIN (Director Identification Number)
- Step 3: Application for the name availability.
- Step 4: Filing of the EMOA and EAOA to register a private limited company
- Step 5: Apply for the PAN and TAN of the company
- Step 6: Issued certificate of incorporation by RoC with PAN and TAN
- Step 7: Opening a current bank account on the company nam
FAQs Convert Sole Proprietorship to Private Limited Company India
YES, any individual can start a company who is of Indian origin/Non Resident Indian( NRI)/ Overseas Citizen of India(OCI)/ Person of Indian Origin(PIO). Even any foreign nationals can also start a company in India with the mandatory documents. But there should be a minimum of 2 directors and a maximum of upto 200 directors.
Usually, after submitting all the relevant documents to the Register of Companies (ROC), it will take around 20-25 days to get incorporated. If there is any imperfection in the submitted documents then the processing time would be a bit longer.
Yes, After acquiring the Director Identification Number(DIN) from the government of India, any foreign national can become/ act as director of the company.