Merger

Querist : Anonymous (Querist) 05 March 2020 This query is : Resolved
can partnership firm be taken over by private company?what is the procedure?how about its valuation?

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Yes, a partnership firm can be acquired by a private limited company, provided specific legal procedures are followed. This involves ensuring compliance with the Companies Act and the company's Articles of Association, passing necessary board resolutions, and executing proper admission-cum-retirement deeds with appropriate stamp duty. Valuation of the partnership firm is typically determined by mutual agreement between the parties involved. It's advisable to consult with a legal professional or Chartered Accountant to navigate the formalities and address potential issues, such as creditor rights and the transfer of assets and liabilities.

Raj Kumar Makkad (Expert) 05 March 2020
A partnership firm can be taken over by a Pvt. Ltd. Company subject to the fulfillment of the requirements. Ensure that the requirements of the Companies Act and the Articles of Association of the Company are met and proper board resolutions are passed in this regard. Proper admission cum retirement deed for the takeover of the share in the partnership deed of the Company is required with adequate stamp duty (depending on the consideration involved and state in which the firm is registered/ located). Further forms for intimation to the Registrar of Firms may be required as per respective state laws.

KISHAN DUTT KALASKAR (Expert) 06 March 2020
Dear Sir,
Yes, depending upon the terms and clauses of partnership deed

Rajendra K Goyal (Expert) 16 March 2020
Partnership firm can be taken over by a Company or can be converted into Pvt. Ltd. Company.

Better consult your lawyer / CA to get the formalities completed.

Valuation is to be arrived at on mutual agreement / understanding.

T. Kalaiselvan, Advocate (Expert) 21 March 2020
The business of the partnership firm can be taken over by Private limited company or by another partnership firm, the assets and liabilities of the firm can be transfer on payment of consideration & on payment of stamp duty.

The directors and shareholders of the private company are not personally liable for the liabilities of the company. Shareholders have limited liability and are responsible only to the extent of their share in the company.
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.
Things to consider

Check either MOA of the company empowered it or not.

Consent of all partners obtained or not.

All statutory due of the partnership firm have been disbursed or not.

Proper valuation of the partnership firm done or not.

Appropriate resolution for the sake has been passed or not.

Consent of the creditors has been taken or not.

How adjustment of assets and liability of the partnership firm to be adjusted.

How partner's account/settlement disbursed..

Rajendra K Goyal (Expert) 21 March 2020
Converting partnership firm into LLP is another option.

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