Proprietorship to Pvt Ltd Company

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    Overview:

    A proprietorship is an unincorporated business owned and managed by a single individual, also known as a sole proprietor. On the other hand, a private limited company (Pvt Ltd) is a type of business entity in which the company is privately held, and the liability of the shareholders is limited to the shares they own.

    Converting a proprietorship to a private limited company is a significant decision that can provide numerous benefits. For example, it can help the business to establish a separate legal entity, raise capital through the sale of shares, and gain greater credibility among potential customers, suppliers, and investors.

    Procedure:

    The procedure for converting a proprietorship to a private limited company involves the following steps:

    1. Obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the proposed directors of the company.
    2. Choose a unique name for the company and apply for it through the Ministry of Corporate Affairs (MCA).
    3. Draft the Memorandum of Association (MOA) and Articles of Association (AOA) of the company.
    4. File the incorporation documents with the Registrar of Companies (ROC) and pay the applicable fees.
    5. Obtain a Certificate of Incorporation from the ROC.
    6. Apply for a new PAN and TAN for the company.
    7. Open a new bank account for the company and transfer all the assets and liabilities from the proprietorship to the new company.

    Documents Required:

    The documents required for converting a proprietorship to a private limited company are:

    1. PAN card of the proprietorship
    2. Identity proof and address proof of the proposed directors
    3. Digital Signature Certificate (DSC) of the proposed directors
    4. Director Identification Number (DIN) of the proposed directors
    5. Copy of the proprietorship registration certificate
    6. MOA and AOA of the company
    7. Proof of registered office address
    8. NOC from the proprietor for using the business name
    9. Bank statements and financial statements of the proprietorship
    10. Tax registration documents such as GST, VAT, and Service Tax registration certificates.

    Checklist:

    Here is a checklist of things to keep in mind while converting a proprietorship to a private limited company:

    1. Choose a unique name for the company that is not already taken.
    2. Ensure that the proposed directors have a Digital Signature Certificate (DSC) and Director Identification Number (DIN).
    3. Draft the Memorandum of Association (MOA) and Articles of Association (AOA) of the company carefully.
    4. File the incorporation documents with the Registrar of Companies (ROC) within the specified time frame.
    5. Obtain a Certificate of Incorporation from the ROC.
    6. Apply for a new PAN and TAN for the company.
    7. Open a new bank account for the company and transfer all the assets and liabilities from the proprietorship to the new company.
    8. Update all relevant stakeholders such as customers, suppliers, and employees about the conversion.

    FAQs:

    Q: What are the benefits of converting a proprietorship to a private limited company? A: The benefits of converting a proprietorship to a private limited company include gaining greater credibility, limited liability protection, and the ability to raise capital through the sale of shares.

    Q: How long does it take to convert a proprietorship to a private limited company? A: The process of converting a proprietorship to a private limited company usually takes 15-20 working days, subject to the availability of all necessary documents.