Takeover of partnership firm consideration is shares
Querist :
Anonymous
(Querist) 17 May 2024
This query is : Resolved
Steps/procedures to be followed for taking over an partnership firm by pvt ltd company by issuing shares sections to be followed companies act, income tax act and what are others steps to be followed in detail
T. Kalaiselvan, Advocate
(Expert) 17 May 2024
A private limited company can acquire the existing partnership firm with the assets and liabilities. It is to be done carefully in view of the rights of the creditors of the existing partnership firm.
The No Objection Certificate must be obtained from the secured creditors of the partnership firm.
Private limited companies often enjoy certain tax benefits. The tax rates applicable to companies can be lower than those for individual partners in a partnership firm. Additionally, private limited companies may have access to various tax deductions, incentives, and exemptions that can help in reducing the overall tax liability.
If there are multiple partners, it is advisable to draft a shareholders' agreement outlining the rights, obligations, and responsibilities of the shareholders in the private limited company.
File Form URC-1 (Application by a Partnership Firm for Registration as a Company) with the RoC. This form should include the details of the partnership firm, proposed company name, details of partners, directors, and registered office address.
Obtain a No Objection Certificate (NOC) from all creditors of the partnership firm, stating that they have no objection to the conversion. Other Required Forms: Fill and submit various other forms, such as Form INC-9 (Declaration by first directors), Form DIR-2 (Consent to act as a director), and Form INC-22 (Notice of situation or change of situation of the registered office).
Querist :
Anonymous
(Querist) 18 May 2024
Thank you sir for your reply
