Conversions

Conversions


Convert from Private Limited to Public Limited

A Public Company has 7 or more members and can invite public to subscribe to its shares. A subsidiary company of a Public company is deemed to be a Public company.
A Private company is an organization which limits its number of members to 200 and cannot invite public to subscribe to its shares. The Companies Act, 2013 provides for converting a Public Company to a Private Company by altering the MOA and AOA of the company.
The main advantage of Public Company is that it can raise reserves at a large scale without approaching banking system and reducing debt whereas Private Companies which are privately owned, all the reserves are raised by existing members, shareholders and promoters. If a Private company goes public then the risk is also shared among the shareholders. Public companies once recorded, get indirect promotions and support through stock exchange websites where their stocks are recorded.

Convert from Sole Proprietorship to Private Limited

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.
To convert a Sole Proprietorship into a Private Limited Company, an agreement has to be executed between the Proprietorship and the Private Limited Company (once it is incorporated) for the sale of the business. Further, such Private Limited Company so incorporated must have “the takeover of a Sole Proprietorship Concern” as one of the objectives in its Memorandum of Association.

Convert from OPC to Private Limited

As per company incorporation rules One Person Company (OPC) will cease to exist when its paid up capital exceeds 50 lakhs rupees or average annual turnover of immediately preceding 3 consecutive financial years exceeds 2 crores rupees.
This means OPC has to compulsorily get converted either to a private or public limited company when it exceeds the above limit. OPC has to get converted within 6 months from the dateon which the paid upshare capital increased beyond 50 lakhs or the last dateof the relevant periodduring which its average annual turnover exceeded 2 crore rupees.
Voluntary an OPC cannot be converted into a private or public limited company within 2 years of its incorporation. It should have total paid up capital less than or equal to 50 lakhs average annual turnover of immediately preceding 3 consecutive financial years exceeds 2 crores rupees.

Convert from Private Limited to OPC

A Private Limited Company can be converted into One Person Company, as per the Companies act, 2013. A Private Company, other than a company registered under section 8 of the Act, having paid up share capital of Rs. 50 Lakhs or less or average annual turnover during the relevant period is two crore rupees or less may convert itself into one person company. In other words a Private Company with paid up capital of more than 50 Lacs or average annual turnover of more than Rs.2 Crores, cannot convert itself into One person Company.A Special Resolution in the General Meeting has to be passed to approve such conversion, before passing such resolution, the company shall obtain a No Objection in writing from existing members and creditors. It is important to note that No objection in writing from existing members and creditors is required shall be collected before passing Special Resolution.

Convert from Partnership to LLP

Partnership Firms can convert their Partnership Firm to Limited Liability Partnership (LLP).
The reasons of conversion are self-evident such as ability to take unlimited number of partners, separate legal entity, limited liability and ease of ownership transfer. Because of these advantages of LLP over Partnership, LLP has become very popular amongst small and medium sized businesses.
The Partnership Firm which wants to convert itself to LLP must be registered under Indian Partnership Act, 1932. Unregistered Partnership Firm can’t be converted to LLP.
LLP incorporated by conversion of Partnership Firm to LLP must have same partners as they were in the Partnership Firm. Therefore it is suggested that the Partnership Firm should retire all the Partners who do not wish to be a part of LLP and if new partners are to be added, they should be added after the incorporation of LLP. LLP has Limited Liability feature, which Partnership Firms do not, being the most prominent benefit.