Conversion of Partnership Firm into Private Limited Company
Converting a partnership firm into a private limited company in India involves a legal process governed by the Companies Act, 2013 and Income Tax Act, 1961. This process allows the firm to enjoy the benefits of a company, such as limited liability, separate legal identity, better fundraising options, etc.
🔁 Step-by-Step Process for Conversion of Partnership Firm into Private Limited Company
✅ Pre-requisites
Minimum 2 Directors: At least two partners must become directors (one must be an Indian resident).
Minimum 2 Shareholders: The existing partners will become shareholders.
DIN & DSC: All proposed directors must have Director Identification Number (DIN) and Digital Signature Certificate (DSC).
Name Approval: The new company name must include "Private Limited" and must not be identical to any existing company or LLP.
Consent of All Partners: A No Objection Certificate (NOC) from all existing partners for the conversion.
📝 Procedure for Conversion
Step 1: Obtain DSC & DIN
DSC (Digital Signature Certificate) for all proposed directors.
DIN (Director Identification Number) for those who don’t already have it.
Step 2: Apply for Name Approval (RUN or SPICe+ Part A)
Use the SPICe+ Part A form for reserving the company name through the MCA portal.
Step 3: Draft MOA & AOA
Memorandum of Association (MOA) – Must state that the company is being formed via conversion.
Articles of Association (AOA) – Governs the internal management of the company.
Step 4: File SPICe+ Form (Part B) with MCA
This form includes:
Incorporation details
Declaration by directors
Consent of partners
Conversion deed or agreement
NOC from partners
Proof of registered office
Identity/address proofs of directors and shareholders
Step 5: Affidavit & Declaration
Partners must declare that:
The firm’s liabilities are settled or will be transferred.
All legal consents have been obtained.
No pending litigation exists (or details provided).
Step 6: Issue of Incorporation Certificate
Once MCA approves, the Certificate of Incorporation is issued.
The new private limited company is now officially registered.
Step 7: Apply for PAN, TAN, GST (if applicable)
📁 Documents Required
| Document | Description |
|---|---|
| PAN Card & Aadhaar of Partners | Identity proof |
| Address Proof | Latest utility bill, bank statement, etc. |
| Partnership Deed | Existing firm deed |
| NOC from Partners | For conversion |
| Latest IT Return of the Firm | To show business continuity |
| Business Address Proof | Rent agreement or ownership proof |
| Digital Signature | For all directors |
| Photographs | Passport-sized |
| Draft MOA & AOA | For the new company |
📌 Key Points to Remember
All assets and liabilities of the firm become those of the company.
The firm is dissolved without winding up.
PAN of the firm becomes invalid – new PAN to be obtained for the company.
All licenses or registrations need to be updated post-conversion.
The conversion must be in line with Section 366 of the Companies Act, 2013, if applicable.
✅ Benefits of Conversion
| Benefit | Explanation |
|---|---|
| Limited Liability | Shareholders’ liability is limited to shares held. |
| Separate Legal Entity | The company is separate from its owners. |
| Fundraising | Easier access to equity and debt funding. |
| Perpetual Succession | The company continues to exist even after owners exit. |
Do write to us if you need any further assistance.
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