Switching from Sole Proprietorship to Private Limited Company in India: An Exhaustive Guide

Procedure for Conversion of Proprietorship to Company

Converting a Sole Proprietorship to Private Limited Company involves several procedural steps to ensure a smooth transition. Below is a general overview of the process:

1. Board Resolution:

   - Obtain approval for the conversion through a board resolution. It may involve meeting the sole proprietorship's owner or board of directors.

2. Name Approval:

   - Apply for the availability and approval of a new name for the company. Ensure the proposed name complies with the Registrar of Companies (RoC) guidelines.

3. Drafting of MOA and AOA:

   Draft the company's Memorandum of Association (MOA) and Articles of Association (AOA).

4. Application for Conversion:

   - Prepare and file the necessary forms with the RoC for converting the sole proprietorship to a company. Include the prescribed fees and supporting documents.

5. Share Allotment:

   - Determine the company's share capital structure and allot shares accordingly. It may involve drafting a share allotment agreement.

6. Obtain Digital Signature Certificates (DSC):

   - Obtain DSC for the proposed directors of the company. All documents filed with the RoC need to be digitally signed.

7. Filing with RoC:

   - Submit the necessary documents, including the application for conversion, MOA, AOA, and other required forms, to the RoC and pay the requisite fees.

8. Certificate of Incorporation:

   - Once the RoC is satisfied with the documents, they will issue a Certificate of Incorporation for the company.

9. Update Statutory Records:

   - Maintain updated statutory records, including the Register of Members, Register of Directors, and other required registers.

10. Intimate Authorities:

    - Inform various authorities, such as the Income Tax Department, about the conversion. Update necessary registrations and licenses.

11. Bank Accounts and PAN:

    - Open new bank accounts in the company's name and obtain a new PAN.