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Conversion of Proprietorship in 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.

Pre-requisites

Shop Act License or Equivalent license/NOC issued by the Gram Panchayat

Minimum Share Capital shall be Rs. 100,000 (INR One Lac) for conversion into a Private Limited Company

Minimum Share Capital shall be Rs. 100,000 (INR One Lac) for conversion into a Private Limited Company

Minimum Share Capital shall be Rs. 500,000 (INR five Lac) for conversion into a Public Limited Co.

Minimum 2 Directors (for Private Limited Co.) and 3 Directors (for Public Limited Co.)

The directors and shareholders can be same person

DIN (Director Identification Number) for all the Directors

DSC (Digital Signature Certificate) for one of the Directors

Procedure for conversion of Sole Proprietorship firm into Private Limited Company

Obtaining Digital signature Certificate: Digital Signature Certificate is required to be obtained by any one of the director of the company.

Apply for DIN: The directors should apply for DIN.

Application in Form INC-29 to ROC for reservation of name, incorporation of a new company and/or application for allotment of DIN, accompanied by supporting documents including details of Directors & subscribers, MoA and AoA etc.

Also DINs gets issued to the proposed Directors who do not have a valid DIN. Maximum three Directors are allowed for using this integrated form for allotment of DIN while incorporating a company.

Affidavit by the Sole Proprietor

Statement of Assets & Liabilities as on date by Chartered Accountant if the proprietorship is doing business from long

Income Tax Returns Acknowledgement

PAN Card of the Sole Proprietor

Sales Tax Registration Number, if you have

Any other Proof showing the name of the Proprietorship firm

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