How to Convert Partnership Firm into Private Limited

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How to Convert Partnership Firm into Private Limited

Preface: This post was originally published in 2023 and has been updated on September 22, 2025, to provide you with the most current and accurate information.

Both partnership firm and private limited company are popular business models among entrepreneurs looking to start a business. Both models have their own advantages. For instance, a partnership firm is easier to form and manage while a private limited company offers better credibility and limited liability protection.

However, sometimes, entrepreneurs prefer to convert their partnership firm into pvt ltd at a later stage due to reasons like business expansion, attracting new investors or gaining legal recognition. If you want to learn how to convert a partnership firm into pvt ltd, then check out this blog post where we explain all the essential steps.

Why Convert a Partnership Firm into a Private Limited Company?

If you’re not sure whether you want to convert your partnership firm into a private limited company, here are a few reasons why many entrepreneurs decide to make a switch:

• Limited Liability:  Although a partnership provides a way to earn money in an unlimited fashion, it also puts an unlimited burden on the partners. If the firm goes through any loss, all the partners are liable for the losses, and because a firm and the partners are not separate entities, the partners can lose their personal assets. That's not the case with a private ltd company, however. It provides limited liability where the directors/shareholders are only liable for the company’s losses to the extent of their contributions in the capital.

• Easier to incorporate: A pvt limited co is far easier to incorporate than a firm. Yes, it sounds a bit weird considering it’s the company that’s actually a legal entity but hear us out. The process of incorporation of a pvt limited co is more streamlined than a firm.

• Easy to access funds: When you suffix “Limited” or “Ltd” or “Limited Company” or “Ltd Company” with a business name, it automatically becomes more trusted. As a result, the banks are more open to give them funds. Additionally, it is easier for a pvt ltd to attract potential investors, such as angel investors and venture capitalists. Many startups that angel investors and venture capitalists invest in are actually registered as pvt ltd companies with the Registrar of Companies (ROC). 

• More trusted: By the virtue of its name, a private limited company is often regarded as more trusted than a p’ship firm. This is because a pvt limited is a separate legal entity from its owners unlike p’ships and has to adhere to much stricter regulatory requirements and audits.

Documents Required for Partnership to Private Ltd Conversion

The following documents are required for partnership to pvt ltd conversion:

• Original Partnership Deed

• Consent of all partners

• Certificate of Incorporation of New Pvt Ltd co

• Audited Financial Statements of Firm

• KYC Documents of Directors/Shareholders

• RUN (Reserve Unique Name)

• Form URC 2

• Digital Signature Certificate

• Memorandum of Association of New Company

• Articles of Association of New Company

Process to Convert a Partnership Firm into a Private Limited Company

Now, let’s jump into the meat of the topic, and let’s convert a partnership firm into a private ltd company. The process is as follows:

• Hold a meeting with the partners: It is essential to hold a meeting with the firm’s partners and take consent from the majority of them for converting the firm into a private ltd company. 

• Get approval from the creditors: Next, you need to get written consent from the creditors to convert the firm into a pvt limited co.

• File the application to get the name approved for your pvt limited company: Once you’ve seeked approval from partners and creditors to convert your partnership into a pvt limited co, you need to take care of the name and ensure that your partnership’s name can be registered as the name of the company. For that purpose, you need to file the RUN Application.

• Publish an advertisement regarding the change of business entity: Now, you need to make people aware that you are converting your firm into a company. For that purpose, you need to use the FORM URC 2. It is required to publish your advertisement informing people about the change in the newspaper. You have to publish the advertisement in two places: one in the national newspaper in the official language and one in the regional newspaper in the regional language.

• File an affidavit: Now, file an affidavit on behalf of all the partners to provide the event of conversion and attach all the required documents including your assets and liabilities certificate, DSC, dissolution of the firm, and others.

• File the necessary documents to the ROC: Finally, you must file necessary forms with ROC for approval of conversion and registration of firm into a pvt ltd company alongwith necessary attachments specifying fact of conversion. Apart from this, all other basic charter documents like Memorandum of Association and Articles of Association required in case of registration of a company under the Companies Act 2013 need to be filed.

As soon as your documents are approved by the ROC, the conversion process will be complete.

Conclusion

Converting your firm into a private ltd company is possible but if you want to have a more credible business and get easier access to funding, it’s better to choose a private limited company from the beginning. If you need help in private ltd company registration in India, you can connect with Registrationwala’s expert consultants for professional guidance. Whether it’s conversion or registration, we are here to help you out in every step so that you can be at peace of mind.

Frequently Asked Questions (FAQs)

Q1. Is it possible to convert partnership firm into private ltd co at a later stage?

A. Yes, it is possible to do this according to provisions of Companies Act 2013.

Q2. Is it possible to convert pvt ltd co into partnership firm at a later stage?

A. No, it is not directly possible to convert a pvt ltd co into a firm. 

Q3. Is a partnership a separate legal entity from its owners?

A. No, a partnership isn’t a separate legal entity from its partners or owners.

Q4. Is a private limited company a separate legal entity from its owners?

A. Yes, it is a separate legal entity from its owners or members.

Q5. Why do entrepreneurs choose to convert a partnership into a pvt limited?

A. Entrepreneurs choose to convert a partnership into a private ltd company since the latter offers limited liability protection, better credibility, enjoys separate legal entity status and provides easier access to funding.

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