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What is the procedure for the conversion of a partnership firm into a private limited company?

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Daya Deepak

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Transforming your Partnership firm into a Private Limited Company is the best technical setup you can opt if you intend to expand your small scale or limited profit ventures to a well-developed enterprise and to strain the investment capital. But this process is not easy since the conversion includes legal as well as technical complications. As per the Companies amendment Act 2017, a partnership firm with a minimum of 7 members can apply to unify their company into a private limited company. But as per the Companies Act, 2013, any Partnership firms with at least 2 members can convert themselves into a Private Limited Company.

Even after the legal testification from the government, the process is difficult since certain requirements must be fulfilled to succeed in our necessity. This includes approval from members, name change application, proclamation in newspapers, approval from ROC, etc.

Steps involved in the Conversion

  • Arrange a meeting of all partners of the firm and take approval for the conversion.

Since all the members of the firm are liable to several duties, if the company intends to convert the firm into a Private Limited Company, consent from more than three fourth of the members is mandatory to perform so.

  • Take consent from the lender

Since the financial assistance is provided by the lender or creditor, the concerned consent of the lender is required to convert the firm into a Private Limited Company.

  • Name sanction for the private company

Submit an application requesting the change of name from Partnership firm to Private Limited Company name along with all the supporting documents confirming that the conversion is performing as per the Companies Act,2013.

  • Advertise the conversion and name change in two newspapers

As per Indian law, the company conversion, along with the name change, must be published in an English paper and in a local newspaper that is in the language of the district the company resides.

  • Affidavit

Register an affidavit, properly notarised, from every partner to present that in the procedure of certification, essential documents must be surrendered to authority with which the firm was initially registered for the dismissal as partnership firm following the conversion into private limited company.

  • Applying for required documents from ROC

Applying for inevitable documents with ROC for the consent of conversion as well as for the registration of the firm into the Private Limited Company with all the required appendages which designates the conversion. This includes certain other basic charter records like MOA, AOA, etc. that takes a prominent role in case of identification of company under the Companies Act, 2013


Jessica David

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a) Registered Partnership firm with minimum 2 or more Partners

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

c) There must be provision in the Partnership deed for converting the firm into Company

d) There must be an agreement between the partners to convert the firm into Company.

d) If the above requirement is not fulfilled by the firm, then the Partnership deed should be altered

e) Minimum 2 Shareholders and Directors. However, Directors and shareholders can be same person.

h) Director Identification Number (DIN) for all the Directors.

i) Digital Signature Certificate (DSC) for two of the Directors.

Procedure of Conversion

1. Hold a meeting of the members

 Hold a meeting of all the partners of Partnership Firm and take assent for the conversion from its partners. Since the liability of the members of the firm is unlimited, when a firm desires to register itself as a company as a limited company, the assent of the majority is required, not less than three-forth of the partners should be present in person.

2. Consent from secured creditors of firm

Also Written consent or No Objection Certificate is to be obtained from the secured creditors of the firm, if any.

3. Obtaining the Name Approval in RUN for Proposed Company

 An application needs to be filed with the Registrar of Companies (ROC) to obtain the name for the proposed company after conversion, with various attachments stating the fact that the partnership firm is proΒ­posed to be converted under the Companies Act, 2013.

4. Publishing the Advertisement in Two Newspaper (English Daily and Vernacular)

Pursuant to clause (b) of section 374 of the Act, firm seeking registration under the provision of Part I of Chapter XXI shall publish an advertisement about registration under the said Part, seeking objections, if any within twenty one (21) clear days from the date of publication of notice and the said advertisement shall be in Form No. URC. 2, which shall be published in a newspaper, in English and in the principal vernacular language of the district in which office of such firm situated and should be circulated in that district.

5. Affidavit

File an affidavit, duly notarised, from all the partners to provide that in the event of registration, necessary documents or papers shall be submitted to authority with which the firm was earlier registered, for its dissolution as partnership firm consequent to its conversion into private limited company.

6. Filing of necessary forms with ROC

Filing of necessary forms with ROC for the approval of conversion and for registration of firm into the Private Limited Company alongwith all the necessary attachments which specifies the fact of conversion and also all the other basis charter documents like MOA, AOA, etc which are required in case of registration of company under the Companies Act, 2013

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