A partnership firm is a popular business structure for most small and medium traders/manufacturers/ service providers. However, a partnership firm is not mandatorily liable to be registered in terms of the extant provisions of applicable law. Furthermore, there is no provision for compulsory audit of a partnership firm. Therefore, as it grows in size, it becomes need of the hour for a business to evolve into a more trustworthy and transparent structure, such as Company. It has been observed that such structures are preferred by critical stakeholders (investors, creditors, etc.). Hence, various partnership firms seek to convert to a corporate structure. Certain relevant queries in connection with the same have been dealt below.
- Investors prefer corporate structures over partnership firms.
- The liability of the members or the directors are limited in case of a company whereas in case of partnership firm the liabilities are unlimited
- A company is more transparent structure of business as compared to partnership firm
- The benefit of startup recognition under the startup India scheme of the government of India can be availed by a company and not by any partnership firm.
- The company has a separate legal identity as compared to a partnership firm.
- There is a separation of ownership and management in a company, whereas in partnership firm, the partners are owners and the managers of the firm.
- Particulars of members along with the proposed shareholding ratio
- Declaration of two or more directors verifying the particulars of all members
- Affidavit from all the partners for dissolution of the firm
- Copy of the Partnership Deed
- Copy of Newspaper advertisement in prescribed format
- Relevant certification from a CA/CS/CWA; etc.
- Consent of majority of members
- No objection certificate from the concerned Registrar of Firms
- Statement of accounts of the existing entity, prepared not later than 15 days preceding the date of application duly certified by auditor
- Undertaking by the proposed directors for compliance with requirements of Indian Stamp Act, 1899
- A copy of latest Income Tax Return of the firm
- Declaration/particulars as per DIR 8, DIR 2,16(1), INC 9
- Bank Statement with current transactions
- KYC documents
- Electricity Bill, Rent Agreement, NOC by the owner of Registered office
- Dissolution Deed
- NOC unsecured creditors &secured creditors
- Preparation of DSC and DIN of all proposed Directors
- Preparation and Filing of name application through web form RUN through MCA portal.
- Preparation and filing of E form URC 1, E form spice, E form Spice MOA & E form Spice AOA
- Appropriate Government fees is payable depending upon the authorized capital of the company.
- Issuance of Certificate of incorporation along with PAN and TAN.
4. What is the time period within which the Conversion of Partnership Firm in Company can be completed?
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The fee mentioned above does not include any govt fees, expenditure towards any newspaper advertisement, certification from any professional, preparation of Statement of accounts and accordingly kindly contact our executive to get an all inclusive fee quote