Sole Proprietor to Private Limited Company

Sole Proprietor to Private Limited Company

CONVERSION OF SOLE PROPRIETOR TO PRIVATE LIMITED COMPANY:-

Many business people start their businesses as a Sole Proprietorship due to the low compliance requirements. As the business and the incomes grow, there is a need to separate the bank accounts and the tax filings of the Sole Proprietor and that of the business. To accomplish this separation a possible solution is to convert the Sole Proprietorship into a Private Limited Company.

To convert a Sole Proprietorship into a Private Limited Company, an agreement has to be executed between the Proprietorship and the Private Limited Company (once it is incorporated) for the sale of the business. Further, such Private Limited Company so incorporated must have “the takeover of a Sole Proprietorship Concern” as one of the objectives in its Memorandum of Association.

DOCUMENTS REQUIRED FOR CONVERSION OF SOLE PROPRIETOR TO PRIVATE LIMITED:-

  • PAN Card of directors and shareholders Foreign nationals may provide passport
  • PAN Card of directors and shareholders Foreign nationals may provide passport
  • Latest Passport size photograph of all directors and shareholders
  • Latest Electricity Bill/ Telephone Bill of the registered office address
  • No Objection Certificate to be obtained from the owner of registered office
  • Rent Agreement of the registered office should be provided, if any
  • The sole proprietor needs to submit an income tax return acknowledgment.

CONDITIONS FOR CONVERSION:

All the assets and the liability of the Sole Proprietary 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.

  MINIMUM REQUIREMENTS FOR CONVERSION:

  • Minimum 2 Shareholders for Private Limited Company Registration
  • Minimum 2 Directors
  • Minimum Rs.1 Lac Share Capital
  • DIN for all Directors

 

  • Professional fees :

  • 29999/-

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