Conversion of Proprietorship into Private Limited Company
As business progresses, its demand and responsibilities increases which can provoke a proprietorship firm to convert his proprietorship into Private limited Company. Conversion of Proprietorship into Private Limited Company can be beneficial in many ways.Business is identified because of the proprietor in case of proprietorship having no separate legal identity and it ends with the death of owner, whereas in Private Limited Company the company has its separate legal identity, which continues even after the death of the owner by his heirs.
Choose Private Limited Company Registration as
The process for registration of a company is governed by the Ministry of Corporate Affairs, Companies Act, 2013 and the Companies Incorporation Rules, 2014. A natural person can be a director and as well as shareholder, where a corporate legal entity can only be a shareholder. In addition to that, foreign nationals, foreign corporate entities or NRIs are also allowed to be the Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.
Some of the unique features of a private limited company like the limited liability protection to shareholders, the ability to raise the equity funds, separate legal entity status and the perpetual existence make it one of the most recommended type of business entity for the millions of small and medium sized businesses that are owned by families or professionally managed.
It takes 7-12 working days on an average to complete online company registration, subject to the government processing time and the client document submission.
Advantages Of Conversion of Proprietorship into Private Limited Company
- Preferred by banks, VCs & investors
- Separate legal entity which limits your liability
- Easy to allocate and redistribute shares to investors or other directors
- Easy to register, manage & run
- Easy to dissolve or wind-up
- Offers the flexibility of a partnership firm and the advantages of a Public Ltd Company
Minimum Requirements For Conversion of Proprietorship into Pvt. Ltd. Company
Procedure For Conversion of Proprietorship into Private Limited Company
Documents Required For Conversion of Proprietorship into Private Limited Company
Identity and Address Proof:
Identity and the address proof will be needed for all the directors and the shareholders of the company to be incorporated. In case of an Indian national, PAN card is mandatory. For the foreign nationals, apostilled or notarised copy of the passport has to be submitted mandatorily. All documents submitted should be valid. The residence proof documents like the bank statement or the electricity bill must be less than 2 months old.
Registered Office Proof:
All companies should have a registered office in India. To prove admittance to the registered office, a recent copy of electricity bill or gas bill or water bill or telephone bill must be submitted. Along with the rental agreement, utility bill or the sale deed and a letter from the landlord with her/ his consent to use the office as a registered office of the company should be submitted.
List of documents to be submitted by the Director and the Shareholders:
Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
Scanned copy of Voter’s ID/Passport/Driver’s License
Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
Scanned passport-sized photograph
Specimen signature (blank document with signature [directors only])
Note: Any one of the directors must self-attest the first three documents. In case of foreign nationals and NRIs, all the documents must be notarised (if currently in India or a non-Commonwealth country) or apostilled (if in a Commonwealth country).
For the Registered Office:
Scanned copy of Latest Telephone or Electricity or Gas Bill or Water bill
Scanned copy of Notarized Rental Agreement in English
Scanned copy of No-objection Certificate from property owner
Scanned copy of Sale Deed/Property Deed in English (in case of owned property)
Note: Your registered office need not be a commercial space; it can be your residence, too.
What are factors one should consider in selecting the company name
The name of the company is very important. It is considered the first impression for the suppliers, buyers and the stakeholders. It must, therefore, be suggestive, relevant and attractive. There are various factors that one must keep in mind while naming the company.
It must be short & simple:
The name must be concise and not be too long. People should be able to say it easily and they should be able to recollect your company’s name the first time they read it or hear it.
It must be meaningful:
The name of the company should be related to the business. It must fit the company’s branding.
It must be unique:
The name of the company mustn’t be the same or identical to an already existing company or a trademark. One must preferably avoid the plural version.
The name of the company must end with the suffix “Private Ltd” in a case of a Private limited company and “LLP” in case of a limited liability partnership.
It shouldn’t be illegal / offensive:
The name of the company shouldn’t be against the law. It shouldn’t be abusive or against customs and the beliefs of any religion.
No, new company registration is a fully online process. As all documents are filed electronically, you would not need to be physically present at all. You would need to send us scanned copies of all the required documents & forms.
If you have all the documents in order, it will take no longer than 7-12 days. However, this is dependent on the workload of the registrar.
Any individual/organization can become the member of the private limited company including foreigners/NRI. However, the individual must 18+ above in terms of age and should have a valid PAN card.
The DSC is an instrument issued by certifying authorities (TCS and n-Code are two of them) by which you can sign electronic documents. As all documents needed are electronic, partners need a DSC.
Yes, so long as the annual compliances are met, the private limited company will continue to exist. If you do not comply with the requirements, it will go dormant, until it is struck off the register altogether.
Yes, a private limited company must hire an auditor, no matter what its revenues. In fact, an auditor must be appointed within 30 days of incorporation. Compliance is important with a private limited company, given that penalties for non-compliance can run into lakhs or rupees and even lead to the blacklisting of directors.
These documents contain the rules, vision and mission of your organisation, and define, among other things, the exact business and the roles and responsibilities of shareholders and directors
Yes, a minimum of two directors are needed for a private limited company. The maximum members can be 200. You can register as a One Person Company, if you are the sole owner of the company.
Yes, a salaried person can become the director in private limited, LLP or OPC private limited company. One needs to check the employment agreement if that allows for such provisions. In a lot of cases, the employers are quite comfortable with the fact that their employee is a director in another company.
The entire procedure is done online and one does not have to be present at our office or any other place for the incorporation. A scanned copy of the documents have to be sent via mail. The incorporation certificate is received from mca on the registered email id of the applicant.
A company is a legal entity and like a different person established under the Act. It is treated as a different person which can own a property and have debts or creditors. The members (Directors/Shareholders/) of a company have no liability to creditors of a company in a case company is unable to pay the debts.
Yes, one can register the company at their residential address. One requires to submit the utility bill copy of the same.
Yes, it is a good to register a family member as a partner. At a later stage one can change this or transfer shares of the directors.Another option is that one can go for One Person Company (OPC).
One needs to start a company with a minimum capital of Rs 2.
Any individual/organization can become a member of a private limited company including NRI/foreigners. Nonetheless, the individual must be 18+ above in terms of age and should hold a valid PAN card.
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“We are associated with your team for last 4 years and we had an amazing experience with your team. Every single time our work has been completed within the given time line.Also the quality of service is excellent.Thanks”
Rajendra Chaudhari • Senior Partner • Forgewell Industries
“It was wonderful experience with Registration Arena during my company registration.Queries were addressed instantly through mails, phone calls; and the follow-up was just fantastic.Within a week of time my private limited was registered.There was no requirement of follow up at all.Also got instant help for opening bank account.Great work team Registrationarena ,would be more than happy to be associated with you guys in future.”
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On Time Delivery
Just tell us a few details about your brand and we’ll process your application. In three working days, you’ll be ready to use the symbol alongside your brand name.
We make your interaction with government as smooth as is possible by doing all the paperwork for you. We will also give you absolute clarity on the process to set realistic expectations.
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Our team of experienced business advisors are a phone call away, should you have any queries about the process. But we’ll try to ensure that your doubts are cleared before they even arise.