An Overview on Partnership Firm into Pvt. Ltd. Company

CONVERSION OF PARTNERSHIP FIRM INTO A PRIVATE LIMITED COMPANY

PARTNERSHIP FIRM: Partnership is the relation between two or more persons who have entered into an agreement to share the profits of a business carried on by all or any of them acting for all. A firm is constituted under a contract between the partners, contract being known as partnership deed which regulates the relationship among the partners and also between the partners and the firm. The persons who form the partnership firm are individually known as partners.

PRIVATE LIMITED COMPANY: For small businesses, the Private Limited Company is the best way to register as a business entity. Typically, this type of company is owned by a group of shareholders, and each shareholder holds a certain number of shares. In accordance with the Companies Act 2013, a company must have at least two members and a maximum of 200 members.

PREREQUISITES FOR CONVERSION:

1. In order to convert the partnership firm, it must be registered with ROC
2. There must be clause of conversion in the partnership deed. However, if no such clause is present, then amend the same.
3. All the partners should give an NOC for consenting such conversion.
4. There must be atleast two directors or two shareholders. Further, the directors and shareholders can be the same person.