Conversion of Partnership Firm into a Company

Conversion of Partnership Firm into a Company:

A Partnership firm can be converted into a Company as per the provisions of Sections 366 to 374 of the Companies Act, 2013 and The Companies (Authorized to Registered) Rules, 2014.

  • Prepare an Execution deed to transfer the business together with all the assets and liabilities.
  • There must be a provision in the Partnership deed for conversion.

Requirement for Conversion:

  • Partnership firm to be registered with the Registrar of Firms.
  • Amend the Partnership deed – add a clause for conversion in the deed, if required.
  • All partners of the partnership firm shall become shareholders of the company in the same proportion in which their capital accounts stood in the books of the firm on the date of the conversion.
  • Consent of majority partners by calling a general meeting for conversion.

Steps for Conversion:

  1. Hold a meeting of the partners to transact the following business:
  • 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 2 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. There should not be revaluation of the assets in the previous preceding three  years.

3. Obtain the Digital Signature Certificate.

4. Obtain DIN in Form DIR – 3.

5. Apply for Name in Reserve Unique Name (RUN).

6. Publish an advertisement in E-form URC -2 about registration in two newspaper (English daily & Vernacular) for seeking any objection              within 21 days of Publish.

7.  A company after obtaining availability of name in terms of the provisions of section 4 of the Act, shall attach the required documents and          information to the Registrar along with Form No. URC-1 (Conversion Form).

8. File E-form INC – 7 (Application for Incorporation) for giving details about all  directors and subscribers of the converted company.

9. Declaration by Professional – E form INC -8 (as an attachment of  INC -7).

10. Required E-form INC -9 [Affidavit from the Subscribers] (as an attachment of  INC -7).

11.  File E-Form DIR -12 (Appointment of First Directors).

12. INC – 22 (Verification of Registered Office) with in 30 days of Incorporation.

After which, the Registrar will register the company and issue a Certificate of Incorporation (COI).

Filing – Form SPICE-32, e-MOA and e-AOA:

  • Affidavit and declaration by first subscriber(s) and director(s).
  • Proof of Office address (Conveyance/ Lease deed/ Rent Agreement etc,. along with rent receipts).
  • Copy of the utility bills (not older than two months) – Resolution of Partners regarding Conversion.