Partnership into company
Querist :
Anonymous
(Querist) 05 January 2012
This query is : Resolved
A partnership firm is proposed to be converted into a Pvt Ltd Company.
As there will be tranfer of land also belonging to the Firm, what will be the position of stamp duty on the same.
The firm is in the state of Rajasthan.
Raj Kumar Makkad
(Expert) 05 January 2012
All property, movable as well as immovable, including actionable claims belonging to or vested in the firm at the time of registration shall, on such registration pass to and vest in the company as incorporated under Part IX. [Section 575].
The registration of a company under Part IX shall not in any manner affect its rights or liabilities in respect of any debt or obligation incurred or any contract entered into, by, to, with or on behalf of the firm before registration. [Section 576].
All suits and other legal proceedings taken by or against the company or any public officer or member thereof which where pending at the time of registration may be continued in the same manner as if registration had not taken place. However, no execution can be done against the property or person of any individual member of the company on any decree or order obtained in such suit or proceeding. If the property of the company is inadequate to satisfy the decree or order, an order for winding up the company may be obtained. [Section 577].
All provisions of any Indian law or other instrument constituting or regulating the company shall apply to the registered company in the same manner as if the company had been formed under the Companies Act, 1956 and those conditions were required to be contained and were contained in its Memorandum and Articles of Association. [Section 578].
As per section 383A of the Companies Act, if the paid up capital of the Company is Rs. 200 lacs or more than the company is required to appoint a full time Company Secretary.
As per section 269 of the Companies Act, 1956 if the paid up capital of the company is Rs. 500 lacs or more than the Company is required to appoint either Managing Director or Whole Time Director or Manager.
Debts and liabilities are not automatically transferred to the new company and therefore a novation agreement will have to be entered into by the company with its debtors and creditors.
It is advisable for the firm to obtain an indemnity from the company to the partnership firm for all acts, deeds and things done after the registration under Part IX and also vice versa. This is required as the liability of the firm is unlimited and extends to the personal assets of the partners.
It is also to be noted that the rights, liabilities, debts and obligations or any contracts entered into by the firm shall remain unaffected as it existed prior to the registration of the company under Part IX of the Companies Act, 1956.
Comply with all the relevant provisions of the Companies Act, 1956 i.e. call requisite meetings, register charges, comply with section 5 8A if necessary, etc
Shailesh Kr. Shah
(Expert) 06 January 2012
Mr.Makkad/Mr.Barman/Mr.Prabhakar,
Respected Sir,
Reply of query is still pending. and i have no knowledge about stamp duty applicability or not as asked by author.
Thanks
with Regards,
Querist :
Anonymous
(Querist) 06 January 2012
What i want to know that also there are cases when we cannot convert the same in Sec 575 as their are less then 7 partners....What will happen in the said situation.
