Partnership firm into Private/ Public Company

Corporatisation is the need of the hour. The entire world is gradually drifting towards one global market without any trade barriers between the countries. A small unincorporated organization led by few partners cannot think of growth on large scale without corporatising itself. Corporatisation has its own advantages such as Limited Liability, Perpetual Succession, Transferability of shares, easy access to funds etc

Key Benefits:

• Automatic Transfer
  All the assets and liabilities of the firm immediately before the conversion become the assets and liabilities of the company.

• No Stamp Duty
  All movable and immovable properties of the firm automatically vest in the Company. No instrument of transfer is required to be executed and hence no stamp duty is required to be paid.

• No Capital Gain Tax
  No Capital Gains tax shall be charged on transfer of property from Proprietorship firm to Company.

• Continuation of Brand Value
  The goodwill of the Proprietorship firm and its brand value is kept intact and continues to enjoy the previous success story with a better legal recognition.

• Carry Forward and Set off Losses and Unabsorbed Depreciation
  The accumulated loss and unabsorbed depreciation of Proprietorship firm is deemed to be loss/ depreciation of the successor company for the previous year in which conversion was effected. Thus such loss can be carried for further eight years in the hands of the successor company.

Key Conditions:

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.

The partners receive consideration only by way of allotment of shares in companyand The partners share holding in the company in aggregate is 50% or more of its total voting power and continue to be as such for 5 years from the date of conversion.

Key Requirements:

• Registered Partnership firm with minimum 7 Partners
• Minimum Share Capital shall be Rs. 100,000 (INR One Lac) for conversion into a Private Limited Company
• Minimum Share Capital shall be Rs. 500,000 (INR five Lac) for conversion into a Public Limited Co.
• If the above requirement is not fulfilled by the firm, then the Partnership deed should be altered
• Minimum 7 Shareholders
• Minimum 2 Directors (for Private Limited Co.) and 3 Directors (for Public Limited Co.)
• The directors and shareholders can be same person
• DIN (Director Identification Number) for all the Directors
• DSC (Digital Signature Certificate) for two of the Directors

Steps in Conversion of a Partnership firm into a Company (Private/Public)

STEP NO.	STEPS	TIME FRAME(Working Days)
1	Preliminary Documentation Discussion between BMC Team & the Promoters of the Company: Ascertaining document requirement and availability Preparation of signing documents by BMC Signing of the Incorporation documents by Promoters Sending the Signed document by Promoters to BMC	5 (Varies by the response time taken by the Promoters)
2	DSC (Digital Signature Certificate) Getting DSC for any one of the Director for digital authentication of the Incorporation documents	1
3	DIN (Director Identification Number) Approved DIN is a pre-requisite for incorporation process	1
4	Preparation of Main Object & Name Availability Search Preparation of Main Object by BMC The Promoters have to provide atleast 6 (Six) names in the order of priority To make an online search of availability of names as desired by the Promoters Confirmation of the draft main object & the final name	3 (Varies by the response time taken by the Promoters)
5	Application for Name Availability Filing of Form 1A with the concerned ROC	5
6	Final Process: After ROC's approval for name of the Company, filing all the Incorporation documents with the ROC Online uploading of e-Forms Payment of Registration fees Receiving Incorporation Certificate	5