Sole Proprietorship to Pvt. Ltd. Company - Overview
When a business is started, most of the owner’s choice is a sole proprietorship on account of its low compliance requirements. Once the business develops, to limit the liabilities and to reduce the burden of annual compliance on a single owner. The best way out is to Conversion of Sole Proprietorship to Private Limited Company
Requirements for Conversion
A takeover agreement or sale agreement needs to be enrolled between the sole proprietor and the company
The Memorandum of Association (MOA) of the Sole proprietorship needs to contain the object 'The takeover of a sole proprietorship ’
All the assets and liabilities of the sole proprietorship must transfer to the company
The shareholding of the proprietor should not be less than 50% of the voting power, and the same should prevail for a period of 5 years
The proprietor or the owner does not get any additional advantage either directly or indirectly, except to the level of shares held.
Benefits associated with Conversion of Sole Proprietorship into Private Company
Credit Availability
separate legal entity
A registered private limited company is more trustworthy when compared with non-registered ones
Ease In Transfer of Ownership
Perpetual Existence
Documents Required For Registration
- PAN Card of shareholders and Directors A valid passport is a must for foreign nationals. .
- Identity Proof of Shareholders and Directors, such as aadhar card and Voter ID/ Passport/ Driving License.
- Address Proof of Shareholders and Directors, such as the latest Telephone Bill /Electricity Bill/ Bank Account Statement.
- Passport size photograph of Shareholders and Directors of updated.
- Business Address Proofs such as latest Electricity Bill/ Telephone Bill of the registered office address
- NOC or No Objection Certificate to be obtained from the owner(s) of registered office
- Rent Agreement is needed if the registered office is a rented place.
Process To Register
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To convert a sole proprietorship to private limited, first, form the private limited company and then take on the sole proprietorship through an MOA or Memorandum Of Association (MoA) and reassign all liabilities and benefits to the private limited company.
Registration process happens through the SPICE+ form and Agile Pro with the required documents, the MCA upon verification approves the conversion with the Certificate of Incorporation.
From filling forms to drafting all the required documents, our experts will take care of everything for you.
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