Question

How is a partnership firm converted to private limited company?

Answer 1

According to the Companies Incorporation Rules 2014 and Companies Act 2013, it is possible to convert a Partnership Firm into a Private Limited Company. For conversion following are the points that should be kept in mind:-

1)There should be at least 3/4th majority of Partners and pass a special resolution for the conversion of the partnership firm into Private Limited Company

2)There should be at least 7 members in the partnership firm for conversion into Private Limited Company

3)For conversion into a company, there should be at least 7 shareholders and 2 Directors

3)Directors and Shareholders can be the same person

4)Firm may be registered with the registrar of the Firms

5)There must be a provision in the Partnership Agreement to convert it into a Private Limited Company

6)There should be a written consent provided by the  partners to convert the partnership into company

Answer 2

Other steps in Conversion of a Partnership firm into a Company are similar to steps involved in formation of an Indian Private Limited Company (Except processing of few additional forms. All the assets and liabilities of the firmimmediately before the conversion become the assets and liabilities of thecompany.