What we do
Our work in this practice group is structured around the records, deadlines, and decisions involved:
- Complete Tax Neutrality: Exempt from Capital Gains Tax under Section 47(xiii) of the Income-tax Act, 1961 and Act, 2025 provided partners hold 50% voting power for 5 years.
- Statutory Asset Vesting: Under Section 367, all real estate, movable property, actionable claims, and contracts vest automatically into the company by operation of law.
- Significant Stamp Duty Savings: Avoids costly registered conveyances and transfer deeds that would otherwise arise upon asset sale.
- Institutional Fundraising: Enables issuance of equity shares, preference shares, and convertible notes to angel networks and venture capital funds.
- Limited Liability Shield: Completely protects personal partner assets from commercial business risks and creditor claims.
- Unbroken Track Record: Preserves continuous operational history, bank credit ratings, vendor empanelments, and government tender eligibility.
- Employee Equity Incentives: Enables ESOP schemes to attract and retain high-performing technical and executive talent.
How the engagement works
Governed by Section 366 to Section 374 of the Companies Act, 2013 and the Companies (Authorized to Register) Rules, 2014. The firm must be registered under the Indian Partnership Act, 1932 or LLP Act, 2008 with at least 2 partners. A public advertisement in Form URC-2 must be published in a principal vernacular and English newspaper circulating in the district where the registered office is located at least 21 days before filing Form URC-1. Under Section 367, all property vests in the company upon registration. Under Section 368, all existing liabilities, obligations, and contracts continue enforceable by or against the newly incorporated company.
Scenario 1: A successful partnership firm with significant brand value, property, and turnover wants to convert to a Private Limited Company without triggering capital gains tax.
Scenario 2: An LLP operating a high-growth tech or manufacturing startup requires institutional VC funding which mandates a Private Limited corporate structure.
Scenario 3: Partners in a traditional registered partnership firm want to permanently shield their personal assets from business liabilities and debts.
Scenario 4: A firm bidding for major infrastructure, defense, or government tenders where public procurement guidelines restrict eligibility to incorporated companies.
Scenario 5: Partners seeking a tax-exempt restructuring under Section 47(xiii) to preserve accumulated depreciation, losses, and asset book values.
Firm Eligibility & Structure Evaluation
We verify partnership registration status, partner counts, capital contribution ratios, and Section 47(xiii) tax exemption preconditions.
Statement of Accounts Preparation & CA Certification
We compile and certify a Statement of Accounts (Assets and Liabilities) prepared not earlier than 15 days preceding the filing date.
Newspaper Publication (Form URC-2)
We draft and publish statutory notices in Form URC-2 in leading English and vernacular newspapers and manage the 21-day objection period.
Partner Consents & Creditor NOCs
We prepare the partnership deed amendment, unanimous partner resolutions, and secure written NOCs from banks and secured creditors.
Form URC-1 & SPICe+ MCA Submission
We submit e-Form URC-1 along with SPICe+ Part A & B, e-MOA, e-AOA, AGILE-PRO-S, and statutory declarations on the MCA portal.
ROC Scrutiny & Certificate Issuance
We liaise with the ROC, resolve technical queries, and secure the Certificate of Incorporation establishing the new Private Limited Company.
Step-by-step process
Step 1: Partner Assent & Accounts Finalization
Obtain unanimous consent of all partners, verify partnership registration, and prepare audited balance sheet not older than 15 days.
Step 2: Newspaper Notice (Form URC-2)
Publish public advertisement in Form URC-2 in English and vernacular newspapers giving 21 days for public comments or objections.
Step 3: Creditor NOC & Name Reservation
Obtain written NOCs from all secured lenders and reserve the proposed company name through RUN / SPICe+ Part A.
Step 4: Filing Form URC-1 & SPICe+
File e-Form URC-1 along with SPICe+ Part B, drafting e-MOA and e-AOA with digital signatures of all partners.
Step 5: Certificate of Incorporation & Handover
ROC registers the company and issues Certificate of Incorporation; all partnership assets and liabilities vest into the company.
Key deliverables & outputs
General questions
01What is the governing section and key form for Partnership or LLP to Company conversion?
The conversion is governed by Section 366 of the Companies Act, 2013 (Part I of Chapter XXI) read with the Companies (Authorized to Register) Rules, 2014. The key form filed with the ROC is Form URC-1 along with the SPICe+ incorporation package.
02Can an unregistered partnership firm convert into a company under Section 366?
No. The partnership firm must be formally registered under the Indian Partnership Act, 1932 before filing Form URC-1. If unregistered, registration with the Registrar of Firms (ROF) must be completed first.
03Is conversion under Section 366 exempt from Capital Gains Tax?
Yes. Under Section 47(xiii) of the Income-tax Act, 1961 and Act, 2025, the conversion is completely exempt from capital gains tax, provided: (1) All assets and liabilities become assets/liabilities of the company; (2) All partners become shareholders in the same proportion; and (3) Partners hold at least 50% voting power for 5 years.
04Is newspaper publication mandatory for Section 366 conversion?
Yes. Under Rule 3(2) of the Companies (Authorized to Register) Rules, 2014, the firm must publish an advertisement in Form URC-2 in an English and a vernacular newspaper circulating in the district at least 21 days before filing.
05What happens to existing properties and bank loans of the partnership firm?
Under Section 367 and Section 368, all real estate, bank accounts, intellectual property, and liabilities automatically vest into the company by statutory operation of law without needing individual transfer deeds.
06What approval majority is required among partners?
Unanimous written consent of all partners is statutorily required to convert the firm into a company.
07How long does the conversion process take?
The process typically takes 4 to 6 weeks, which includes the statutory 21-day public notice waiting period and ROC scrutiny.