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Proprietorship To Private Ltd Conversion


At Just Rs 13,999/- (All inclusive)

Completely online process

Work handled by professionals

Within 15-20 Working Days

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Sole Proprietorship To Private Limited Company Conversion

Many people start their business as a sole proprietorship due the low compliance requirements as well as annual filing expenses. As the business and income grows over the time there comes a need for a separate legal entity having separate bank account and transparent business system.A proprietary business may be converted into a company by either making the sole proprietor as one of the subscribers to the Memorandum i.e. he becomes the first member or, the new company which is incorporated takes over the sole proprietorship . There must be specific provision in the Memorandum of the new company for taking over other business as one of its objects and powers must be given to the Board of Directors by the Articles of the new company, to enter into agreements for acquisition of business.

Condition For Sole Proprietorship to Private Limited Company Conversion

  • All the assets and the liability of the Sole Proprietors concern relating to the business immediately before the succession become the assets and the liability of the company.
  • The shareholding of the sole proprietor in the private limited company is not less than 50% of the total voting power in the company and his shareholding continues to remain so for a time period of 5 years from the date of the succession.
  • The sole proprietor does not receive any benefit or consideration, directly or indirectly, in any form or manner, other than by way of allotment of shares in the company.
  • The Board of Directors shall enter into an agreement with the firm for its acquisition. Shares have to be allotted by the Board of Directors to the sole proprietor according to the terms of agreement.

Documents For Sole Proprietorship to Private Limited Company Conversion

  • Passport size photograph of Directors
  • Copy of Aadhaar Card/ Voter identity card
  • Copy of PAN Card of the Directors
  • Electricity/ Water bill (Business Place)
  • Landlord NOC (Format will be provided)
  • Service tax or sales tax number if any
  • Proprietorship registration certificate

Cost of Sole Proprietorship to Private Limited Company Conversion

Company Name SearchNIL
2 DSC1800
Government Fees4000
Stamp Duty1200
TAN & PAN Fees180
Professional Fees7019

Procedure of Sole Proprietorship to Private Limited Company Conversion

Obtaining DIN & DSC

(1-3 Working Day)
  • Digital Signature Certificate(DSC) and Director Identification Number(DIN) is required for the proposed Directors of the Private Limited Company. DIN and DSC can be obtained for the proposed Directors within 5 to 7 days.

Document Review & Completion

(3-4 Working Day)
  • After obtaining the DSC and DIN of the proposed Directors, our team will get in touch for a unique name and along with that collect all the requisite documents in scan for the incorporation of the company through the SPICE i.e INC 32.

Document Submission

(1-2 Working Day)
  • After the review of all the documents required, we will submit them to the MCA and once it gets approved by the ministry we will send the MOA & AOA via mail and DSC through courier

FAQ’s About Sole Proprietorship to Private Limited Company Conversion

Can a Sole Proprietorship be converted into a Private Limited Company?

Yes, a sole proprietorship can be converted into a Private Limited Company by executing an agreement.

What is the minimum paid-up capital of a Private Limited Company?

As per the amendment in the Companies Act, 2013 there is no minimum amount of paid up share capital required for the Incorporation. There is no upper limit on having the authorized capital and the paid up capital. It can be increased any time, by payment of additional stamp duty and registration fee.

What are the benefits of converting a sole proprietorship into a Private Limited Company?
  • The liability of the members is limited to their shares.
  • Death or insolvency of the member does not affect the existence of the company.
  • A Private Company has more creditworthiness due to its stringent compliance and disclosure.
What is the Memorandum of Association (MOA) and the Articles of Association (AOA) of a company and what is the procedure in their regard?

On receipt of the name approval letter from the ROC the MOA and the AOA are required to be drafted. The MOA states the main, ancillary / subsidiary and other objects of the proposed company. The AOA contains the rules and procedures for the routine conduct of the proposed company. It also states the authorized share capital of the proposed company and the names of its first / permanent directors. After the MOA and AOA are required to be stamped.
A stamp duty is required to be paid on the MOA and on the AOA. The stamp duty depends on the authorized share capital.

Can NRI’s/Foreign national become a director in Private Ltd Company?

Yes, a NRI or a foreign national can become the director in the private limited company, subject to the condition that out of all the directors’ atleast one director should be resident in India for more than 182 days.
Apart from one condition above, there is no other condition attached to it.

How is the certificate of incorporation issued?

After all the documents are filed, the ROC calls the attorney on a specific date for scrutiny and making the corrections in the MOA and AOA filed. On complying with the same, the certificate of incorporation is granted to the attorney.

What are the documents required for bank account opening of Private Ltd Company?

Once the private limited company is formed, there are various documents which are required for bank account opening. The lists of documents required for opening the bank account are as follows:

  • Certificate of Incorporation
  • PAN Card Acknowledgement
  • Memorandum of Association (MOA)
  • Articles of Association (AOA)
  • Board Resolution as per the format is given by Bank
  • Bank Account opening form as per respective bank.