Sole Proprietorship to Pvt Ltd

Overview of Sole Proprietorship to Pvt Ltd

Not all benefits of operation with a sole ownership cannot be found. Therefore, ownership will need to be converted into a private limited company. Conversion can bring all the benefits of the company in its awakening like high capital, limited liability, and so on. A private limited company provides several benefits of conversion of an ownership, but also brings with the spread of power and loss of freedom. So the decision should be taken after carefully considering all the factors involved and see if it really explains the privileges.

Eligibility criteria for Sole Proprietorship to Pvt Ltd in India

Before you convert your Sole Proprietorship into a Private Limited Company, you must ensure to fit the following criteria:

1. A Private Limited Company can’t be headed alone. Thus, you’d need to appoint another director
2. You will need at least two shareholders
3. You should have the consent of everyone you once held debt to as a Sole Proprietorship
4. You must have up-to-date financial documents about your Sole Proprietorship

• Conditions for Conversion

1. A takeover agreement or sale agreement needs to be entered into between the sole proprietor and company.
2. The Memorandum of Association (MOA) needs to carry the object “The takeover of a sole proprietorship”.
3. All the assets and liabilities of the sole proprietorship must be transferred to the company.
4. The shareholding of the proprietor should not be less than 50% of the voting power, and the same must continue to be held for a period of 5 years.
5. The proprietor does not receive any additional benefits either directly or indirectly, except to the extent of shares held.

Documents required to obtain an Sole Proprietorship to Pvt Ltd

The following documents are required for conversion:

1. PAN Card copy of all directors (Identity Proof).
2. Copy of Aadhar card/ Voters ID (Address Proof).
3. Passport size photographs of Directors.
4. Proof of ownership of business place (if owned).
5. Rental agreement if rented.
6. No Objection Certificate (NOC) of Landlord.
7. Electricity or water bill.

• The forms to be submitted to the MCA are:

1. Form 1 must be filed with the MOA, AOA and other documents.
2. Form 18 specifies the details of the registered office.
3. Form 32 contains particulars of the information of the directors.

FAQs About Sole Proprietorship to Pvt Ltd?

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