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Conversion of Proprietorship into Private Limited

Scale your business from Proprietorship to Pvt. Ltd Company to multiply business growth

Convert Sole Proprietorship To Pvt Ltd

Convert Sole Proprietorship To Pvt Ltd Registration

Fees and charges

7999/- only

Registration in just 10 - 15 Days

No Additional Government Fees

No Govt. Fees

Conversion from Proprietorship to Private Limited Company

Initially, when a business is established, the most preferred choice is a sole proprietorship structure because of its low compliance requirements. Once the business grows, it is essential to take steps to limit the liabilities and reduce the burden of compliance on a single person. The best way out over here is to convert proprietorship to private limited company. For the purpose of conversion of sole proprietor to a private limited company, it is necessary by the promoters of the company to indulge into an agreement which is to be made for selling the business. Further, such conversion from sole proprietorship to Private Limited Company must have clearly mentioned about “the takeover of a Sole Proprietorship Concern” as one of the objectives in its Memorandum of Association.

Benefits of conversion from Sole Proprietorship to Private Limited Company

Separate Legal Existence

The private limited company is a separate legal entity, and its existence is separate from its members This makes the business possible to own assets and enter into contracts in the name of the private limited company or sue a third party in case of a dispute. The members (Shareholders/Directors) of a company have no personal liability to the creditors of a company for the company’s debts beyond their holding in the company.

Limited Liability of Directors

In a private limited company, the personal assets of the director’s remain untouched if there are any outstanding debts on the company. Only the money invested for incorporation or the assets of the company are to be sold off for paying off the dues.

Easy Transferability

The ownership of the business can be transferred to an individual or to a company by transferring the shares with the consent of shareholders. This transfer is much easier whereas in proprietorship such transfer is not allowed.

Uninterrupted existence

A private limited company is a separate legal entity and hence it has a perpetual succession. Unlike a sole proprietorship, it is unaffected by the death or other departure of any member. It continues to be in existence irrespective of the changes in membership.

Documents required converting Sole Proprietorship to Private Limited Company (Heading)

  • A written agreement between the sole proprietorship and private limited company must be formed and sent to Registrar of Companies
  • Digital Signature Certificate (DSC) of all directors
  • Director Identification Number (DIN) of all directors
  • Altered Memorandum and Articles of Association (MOA/AOA)
  • Form 32 – This form is to be filed whenever there is a change or update in board of directors
  • Form 18 – This contains the notice of situation of the registered office of the proposed company
  • Form 1 – This to be filed to validate name availability of the newly formed company
  • Letter of authority or Power of Attorney (POA)

For how long can i run the sole proprietorship in existence with the newly formed private limited company?

The proprietorship must be closed within three months of incorporating of the Private Limited Company.

Are the assets of the sole proprietorship transferred to the private limited company?

The assets of proprietorship can be converted into capital for the Private Limited Company, via the making of resolutions and further contracts/agreements. Any debt owing to any creditors (including fines/penalties) will have to be settled before the transfer of such assets.

How do i transfer proprietorship funds to private limited company funds?

All banks accounts used for the sole-proprietorship need to be closed, and a new bank account under the Private Limited Company need to be opened. Naturally, all cheques and bank transfers need to be made in favour of the Private Limited Company henceforth.

Can i transfer the licenses and permits from sole proprietorship to private limited company?

No. All licenses and permits must be re-applied under the Private Limited Company following necessary procedures to concerned authorities.