The major benefit of registering a Private Limited Company is that it has the status of a separate legal entity that a Partnership firm does not have. Private Limited Company has Limited Liability whereas in the case of partnership firm partners are personally liable for each and every debt. Private Limited structure is more transparent than other business structures. PLC has its own advantages such as Limited Liability, Perpetual Succession, easy access to funds, etc. Convert your Partnership Firm into PLC following the procedure mentioned below.
Further, 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.
Amend Partnership deed – Add clause for conversion in deed, if required
In addition, consent of the majority of members by calling a general meeting for conversion.
Step by step guide to help you convert Partnership firm into PLC:
Convene a meeting for the Conversion of Partnership Firm Into Private Limited Company
– To take assent of majority of its partners, not less than three-forth of the partners should be present in person. – To authorize two or more partners to take all steps necessary and to execute all papers, deeds, documents etc.
Apply for DSC and DIN for all directors and shareholders of the company.
Obtain DSC of all directors and shareholders. In addition to that obtain written consent or No Objection Certificate from the secured creditors of the firm, if any.
Obtain name Approval in RUN
File an application in RUN on the MCA website to obtain the name for the proposed company after conversion. Along with various attachments. Further also stating the proposal for conversion of the partnership firm.
File Form URC-1 along with the necessary attachments with ROC
File Form URC-1 within 30 days of name approval.
Publish an advertisement in Two Newspaper
– As per section 374(b) of Companies Act, 2013 firm seeking registration under the provision of Part I of Chapter XXI shall publish an advertisement about registration. – Seeking objections, if any within 21 clear days from the date of publication of the notice. – The said advertisement shall be in Form No. URC-2. – Further, these shall be published in 2 newspapers one in English and other in the principal vernacular language of the district.
Draft MOA and AOA
Therefore, after obtaining name approval, and approval of E-FORM URC-1 from the Registrar, the applicant is required to draft the Memorandum and Articles of Association and other relevant documents necessary for incorporation.
File necessary forms with ROC
File INC-32, INC-33, INC-34 and AGILE along with the earlier mentioned forms on MCA Website.
Once the Registrar in satisfied on the basis of documents and information filed by the applicants,
He shall issue a certificate of incorporation in Form No. INC.11.
Intimate ROC under which it was previously registered.
Along with documents for its dissolution as a firm
List of documents to be attached
With Form URC-1
A list showing the names, addresses, and occupations of all persons named therein as members with details of shares held by them.
Also, a list of persons proposed as the first directors of the company.
An affidavit from each of the persons proposed as the first directors, that he is not disqualified to be a director under section 164(1). Further that all the documents filed with the Registrar for registration of the company contain correct, complete, and true information to the best of his knowledge and belief.
Partnership deed, along with the revised deeds, in case the firm is regd.
A statement of assets and liabilities of the partnership firm duly certified by a chartered accountant.
Further, a copy of the latest income tax return of the Partnership Firm.
A statement specifying the following particulars:
The nominal share capital of the company and the division of shares.
The number of shares taken and the amount paid on each share.
KYC document of Directors and shareholders of the proposed converted company.
Utility Bill (not older than two months).
Lease deed/ title deed for the regd. office address of the company.
Detail of main and other objects of the company.
Is capital gain or stamp duty charged on conversion?
No Capital Gains tax or stamp duty shall be charged on transfer of property from Partnership firm to a Private Limited Company.
What are the minimum capital requirements to convert partnership into private limited?
Following are the minimum requirements: – Appointment of minimum 2 directors, out of which one must be a resident of India. – Minimum requirement of 2 shareholders for this registration. Further, an individual may become shareholder and director at the same time. – A place of business in India must be provided as a regd. office address
A Public Limited Company is a separate legal business entity having limited liability. The securities of a Public limited company are traded on a stock exchange. In order to register as a Public Limited Company, the company must have a minimum of 3 Directors and 7 Shareholders. And should also have Rs 5 Lakhs as Paid-up Capital.
It will take you to another Portal. Now login using your MCA credentials.
Under entity type select Public Limited Company. You don’t need to add CIN since it for existing registered companies. Enter the proposed name make sure it is not similar to the existing name.
Fill in the required information.
Click on the Auto check. Further, if the name matches an entry in the database, it will show an error. Once the proposed name is error-free, you need to pay a minimum amount of Rs. 1000 run the similarity test and to reserve the name.
If the proposed name is approved by the Ministry. You will receive a notification about the same on your registered email address.
Download all the forms of incorporation on MCA Website.
File Form INC-12 also known as SPICe form.
For application of licence for Public Limited Company.
Can a salaried person become director of company ?
Yes, there is no legal hurdle. However employment agreement may have some restriction.
What are the primary requirements for a public limited company?
Following are the primary requirements of Public Company: – The minimum number of shareholders must be 7. – File accounts within 6 months of the year-end. – The minimum Paid-up share capital must be Rs. 5 lakhs. – The minimum number of Directors is 3.
Can an NRI/Foreign National be a director in Public Limited Company? and If Yes, then what are the conditions for the same?
Yes, an NRI or Foreign National can also be a shareholder or director in a Public Limited Company of India. However, for becoming a director, such a person must possess the DIN issued by MCA.
MCA started an initiative to provide Ease of Doing Business in India. As a part of this initiative, MCA introduced RUN service. RUN can only be filed after you login on MCA Portal. Hence you either need to create an account on MCA Portal or Login to your MCA portal account to reserve the company name. In the process of company incorporation, apply for the name of the company through RUN service of MCA Portal.
Go to MCA Services > Company Services > RUN (Reserve Unique Name)
Enter the required details and click on Submit
Make the payment of Rs.1000
Use SRN to track the status of name approval
Fees and Validity of RUN
Fees of INR. 1,000 is payable at the time of submission of RUN. An approved name is valid for a period of:
20 days from the date of approval in case of a New Company,
60 days from the date of approval in case of an Existing Company.
Post Submission Process
Once RUN is submitted along with fees. SRN (Service Request Number) gets generated. You can track the status of your application through the SRN so make sure to save it. Challan for payment of fees also gets generated. An email will be sent to your registered mail id once an application gets processed. An application can be approved or rejected by the MCA.
Reasons for Rejection of RUN
Rejection happens when names proposed in RUN form are found undesirable by MCA Administrator Following are the common reasons for rejection of RUN:
Proposed name resembles the name of an already registered company,
The proposed name includes the word for which Trade Mark is registered by someone else,
The proposed name is a name of a registered partnership firm and NOC is not attached with RUN.
In case of Rejection of RUN, you can Resubmit the RUN Form. Resubmission needs to be done within 15 days from the date of rejection of RUN.
Who can file RUN to reserve name?
Any individual who wishes to incorporate a new company can file RUN to reserve a name. The only prerequisite is to have an account on MCA Portal. You can either create a new account or use your current account to file RUN.
I want to incorporate Private Limited Company which Entity type should I select in RUN?
You need to select the New Company (Others) from the dropdown list. And while entering name add Private Limited as a suffix.
Can I change the name of my LLP while converting it into Private Limited Company?
No. You can start the conversion of LLP into a Private Limited Company by using RUN. But the LLP name and proposed company name should remain the same.
You can easily reserve a name for your new company using RUN service of MCA. However, MCA has provided rules to keep in mind while selecting a name of company. The following are some basic rules to keep in mind:
Name must be unique,
The name shall not be identical or resemble too nearly to the name of any existing company or LLP, you can check the company name from the MCA portal,
The name shall not be a registered trademark, you can check out the registered trademark from here.
Rules to select Company Name on MCA
The name shall not include the words indicative of a separate type of business constitution. For example, the name should not contain co-operative, sehkari, trust, LLP, partnership, society, proprietor, HUF, Inc., PLC, etc. in the name.
The proposed name shall not contain the words ‘British India’
The name shall not imply association or connection with the embassy or consulate or a foreign government.
The name shall not imply association or connection with or patronage of a national hero or any person held in a high esteem position in Government.
The proposed name shall not include words such as ‘Insurance’, ‘Bank’, ‘Stock Exchange’, ‘Venture Capital’, ‘Asset Management’, ‘Nidhi’, ‘Mutual Fund’ etc. To include such words in the name, the applicant must submit a declaration based on the requirement of different regulators such as IRDA, RBI, SEBI, MCA, etc.
The name shall not include the name of a continent, country, state, city. For example, an applicant cannot choose names like Asia Limited or Germany Limited or Haryana Limited.
The proposed name shall not imply any connection with the Central Government, State Government, or any local authority. For the use of such words, a previous approval from the authority is necessary.
The name shall not include the name of a person other than promoters or their close blood relatives. In such a case, the applicant shall take NOC i.e. No Objection Certificate, and attach it with RUN Form.
The name shall not include the name of any sole proprietor or partnership firm already registered. In such a case, the applicant shall take NOC i.e. No Objection Certificate from the proprietor or partnership firm.
For the Companies under Section 8 of the Act, the name shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and the like, etc. Every company incorporated as a “Nidhi” shall have the last word ‘Nidhi Limited’ as part of its name.
The proposed name shall not include words such as Board, Commission, Authority, Undertaking, National, Union, Central, Federal, Republic, President, Municipal, Panchayat, Development Authority, Minister, Nation, Small Scale Industries, Governor, etc. To use such words, previous approval from the Central Government is required.
I have a partnership firm registered in Tamil Nadu? Can I give my new company the same name as my Partnership Firm?
Yes. You can give your new company the same name as your partnership firm. But while filing RUN form you need to attach NOC from the partnership firm.
Can I name my company after my name?
Yes, you can name your company after your name. However, you need to keep in mind that you are a promoter of that company.
What is a NIDHI company?
A NIDHI Company is notified under section 620-A of the Companies Act and is classified as “Mutual Benefit Financial Company” by the RBI. Essentially, a Nidhi Company differs from a regular finance investment company or a Non-Banking Finance company (NBFC), as it deals only with its shareholders or members, for mutual benefits of its members. A Nidhi Company accept deposits only its members and lends funds only to them on demand. A Nidhi Company is not entitled to carry out business/activities related with hire purchase financing, leasing finance, chit funds, acquisition of securities issued by any corporate body, etc. or issue any debt instruments (such as preference share,debentures, etc.) in any form
Once the Company files RUN Form, it is approved or rejected by MCA. You will receive an email from MCA Administrator on approval or rejection of an application. In case of rejection of RUN, Resubmission of RUN is allowed in certain specific situations. You will have 15 days for resubmission of RUN.
How does one reserve a name? Are there any considerations to be kept in mind while providing a name to the company?
An applicant can pick up any suitable name for the company, provided that (i) the company cannot be registered with a name which is undesirable as per the Central Government (ii) the name of the company has to end with ‘Private Limited (iii) the name which is chosen for the company should not resemble or be identical to the name of another registered company. One can reserve the name of its company via Reserve Unique Name form (“RUN”).
How long is the approved name valid for?
An approved name is valid for a period of twenty (20) days from the date of approval of such name.You can file the remaining incorporation forms i.e, SPICe INC -32, 33 & 34 from the date of the name approval letter to incorporate a company
Is it mandatory to reserve a name in advance?
No, it is not compulsory to reserve a name through the RUN service. The approval of a name can also be sought while filing the SPICe (INC-32) form.One can apply for the proposed name through SPICe (INC-32) form on the MCA portal. Only one name can be applied for under this form. However, in case of rejection due to non-approval of the name, the applicant in this case gets a second chance of refilling the same SPICe (INC-32) form without any further charges.
As per the new process of incorporation, the name of the proposed company can be reserved through RUN Form. Resubmission of RUN Form is required when names proposed in the RUN form are found undesirable by MCA Administrator. MCA portal only allows one resubmission of the RUN Form.
Who can resubmit RUN Form?
An individual who has applied for name reservation through RUN from his/ her login can resubmit RUN. SRN of earlier filed RUN is required for resubmission of RUN.
What is time limit for Resubmission of RUN Form on MCA?
In case of resubmission of RUN Form, the time limit is mentioned in the email sent by the MCA Administrator. Usually, they allow 15 days time.
Steps for Resubmission of RUN on MCA
The first step is to check the reason for resubmission and the remarks provided by the administrator. Select the new names for the company to avoid rejection and follow the below-mentioned steps.
Go to MCA Services > Company Services > RUN (Reserve Unique Name)
Click on Resubmission and enter SRN
Click on the option of Resubmission and enter the SRN of the RUN Form filed earlier
Select Entity Type
Select Entity Type i.e. Type of Company. Select New Company (Others) if reserving name for Private Limited Company. Select Private (OPC) if reserving a name for One Person Company
Enter Proposed Name
Enter the new Proposed Name 1 and Proposed Name 2 with a suitable suffix
Click on Auto Check
The system performs the primary check for the name entered and displays the message whether it is valid or invalid
Enter Objective of Company
Enter the objective of the new company in brief under Comment
Attach NOC i.e. No Objection Certificate or any other certification by clicking on Choose File. It is not mandatory to attach relevant documents
Click on Submit, a pop up with the successful submission will appear.
Once resubmission is complete. MCA will process the same. An email with name approval or rejection will be sent to you. If you are facing any issues while resubmission of RUN Form, you can connect with an expert from Quicko.
You will have to make a new application in RUN again in case of rejection. And make payment of fees again.
What are the next steps after the name approval of RUN?
Following are the steps once RUN is approved:
1. Prepare SPICe INC – 32 Form, 2. Prepare e-MOA in SPICe INC – 33 and e-AOA in SPICe INC-34 of a company, 3. Upload Linked Forms from your login.
What is the Memorandum of Association and Memorandum of Articles? Is it mandatory to use e-MOA and e-AOA?
Memorandum of Association represents the charter of the company while Articles of Association refers to the internal rules and regulations of the company. These are required for the incorporation of a company and need to be filed with the MCA. It is mandatory to use e-MoA and e-AoA only in the case of the following: individual subscribers are Indian nationals; 1. Individual subscribers who are foreign nationals (in case they have valid DIN and DSC and have proof of a valid business visa); and 2. Non-individual subscribers based in India.