Sole Proprietorship into a Private Limited Company

There is no specified procedure in the law to convert a Sole Proprietorship to PVT LTD. But there is a another way to convert it.

As per the Companies Act 2013 & Companies Incorporation Rules 2014 there is no specific provision for this type of conversion. As Sole Proprietorship Firms are not governed by any law. It is difficult to find any straight way to convert it.

Why convert Sole Proprietorship to Private Limited Company?

A Sole Proprietorship Firm is an ordinary type of doing business. It is not registered under any law, but still, people use to register it. Because it has almost no compliance as compared to the private limited company and other form of corporate business.

The reason to incorporate Private Limited Company is to grow your business and save the goodwill of the business.

A private limited company is registered under Companies Act 2013; The company is registered under the jurisdiction of the central government. Which gives the immunity to the company thier name from all over India. A company can be registered with the name of the registered Sole Proprietorship but once a company registered no business model can open a business with the same name. If somebody does, then company Director can file a suit against them.

Procedure to convert Sole Proprietorship to Private Limited Company

Incorporate a Private Limited Company

1. Apply for DSC of Director
2. After applying for DSC, the directors of the company should apply for DIN number in the form DIR-3
3. After getting the DIN, Company can file an application for the Name Reservation
4. After getting the Name Approval. An applicant can file & complied with  Spice forms & complete the incorporation process.

Read More: Private Limited Company Registration Procedure

Convert Sole Proprietorship to Private Limited Company

1. After the company gets incorporated Directors need to Pass a Special Resolution in the Annual General Meeting to take over the Sole Proprietorship