Conversion of Sole Proprietorship to Private Limited Company
Legal assistance in converting a sole proprietorship into a private limited company, ensuring smooth transition and regulatory compliance.Plan Overview
Transitioning from a Sole Proprietorship to a Private Limited Company (PLC) is a strategic move for business owners seeking limited liability protection, enhanced credibility, and better access to funding. Unlike a sole proprietorship, a PLC is a separate legal entity, allowing for perpetual succession and the ability to own assets and incur liabilities independently. This conversion is governed by India's Companies Act of 2013 and the Income Tax Act of 1961.Services Included
Documents Required
To facilitate the conversion, the following documents are typically required:
Identity and Address Proof of Directors and Shareholders:
- PAN Card
- Aadhaar Card
- Voter ID
- Passport
- Driving License
Proof of Registered Office:
- Recent utility bill (not older than two months)
- Rental agreement (if the premises are rented)
- No Objection Certificate (NOC) from the property owner
Additional Documents:
- Digital Signature Certificates (DSC) for proposed directors
- Director Identification Number (DIN) for proposed directors
- Memorandum of Association (MoA) and Articles of Association (AoA)
- Proof of business continuity (e.g., sales tax or service tax registration)
- Asset and liability statement of the sole proprietorship
Process
10-15 Days Estimate
Obtain Digital Signature Certificate (DSC):
Acquire DSCs for all proposed directors to facilitate electronic filing.
Apply for Director Identification Number (DIN):
- Submit applications to obtain DINs for the proposed directors.
Name Reservation:
Apply for name approval through the RUN (Reserve Unique Name) service on the Ministry of Corporate Affairs (MCA) portal, ensuring the proposed name is unique and adheres to naming guidelines.
Draft Incorporation Documents:
- Prepare the Memorandum of Association (MoA) and Articles of Association (AoA) outlining the company's objectives and rules.
File Incorporation Forms:
- Submit the SPICe+ (INC-32) form along with MoA, AoA, and other required documents to the MCA.
Obtain Certificate of Incorporation:
Upon verification, the Registrar of Companies (ROC) issues the Certificate of Incorporation, signifying the formation of the PLC.
Transfer of Assets and Liabilities:
- Execute a formal agreement to transfer all assets and liabilities from the sole proprietorship to the newly formed PLC.
Update Registrations and Licenses:
- Amend all existing registrations and licenses (e.g., GST, Import Export Code) to reflect the change in business structure.
Close Proprietorship Bank Account:
- Open a new bank account in the name of the PLC and close the sole proprietorship's bank account.