Compliance under Companies act

Change in object clause

After incorporation of a company, it may want to change object clause. This requires alteration in the MOA of the company and section 13 of the Companies Act 2013 covers the same. Ever clause on the MOA can be altered (with the exception of capital clause which requires an ordinary resolution to be passed) by passing a special resolution as mentioned in section 13. We cover the basic process to change the object clause of MOA of a company as per Companies Act 2013.

We also deal with :

• Conversion of sole proprietorship to private limited
• Conversion of sole proprietorship to LLP
• Conversion of partnership to LLP
• Conversion of partnership to private limited
• Conversion of Private limited company to public limited company
• Conversion of Private limited company to one person company

Increase in Authorised Capital

Procedure to increase the Authorised Share Capital of A Company

The authorised share capital of a company is the maximum amount of share capital that the company is authorized to allocate to its shareholders. No company has a right to issue shares exceeding the authorised capital. But when the business is on the rise, and there is need for more investment then the law has given the right to increase the authorised capital and ask for more investment.

Procedure to increase the authorised capital of a company is as follows:

• Holding Extraordinary General Meeting: Extraordinary Meeting need to be called by giving a notice for the same for alteration in the authorized capital of the company. Minutes has to be recorded describing the capital already invested in the company and the amount of capital required to be increased.
• Resolution : The ordinary resolution in the meeting for the increase of authorised share capital.
• Issue notice for EGM: A notice has to be issued to the members, director and shareholders of the company for EGM in accordance to the cause of the meeting.
• Authorize in Articles: There should be a clause in Articles of association allowing for the increase in the authorised capital of the company, if there is no such provision found then articles have to be altered beforehand by passing a special resolution for the same.
• Registrar of Companies Form Filing: After passing the ordinary resolution, the next step is to file the form SH-7 within 30 days of resolution with the concerned registrar of companies.
• Documents: Along with the form SH-7, attach the following documents and fees prescribed
1. Notice of Extraordinary General Meeting.
2. Certified and true copy of ordinary resolution. 3. Altered memorandum and articles of association, in case.
• After receiving the Forms and the attached documents, the concerned registrar of companies will check and then approve for the increase of authorised share capital.
It is important to note that the notice of the increase of capital must be given to the registrar within 30 days along with altered articles and memorandum. There is no need to pass any special resolution for this reason.

Conversion of Sole Proprietorship to Private Limited Company

As the proprietorship has almost no definition, besides that given to it by one of the many licenses you can take to get one (SSI, VAT or Service Tax registration, for example), transferring the business to a private limited company is easy. All you need to do is go ahead and start a private limited company and submit an agreement between the sole proprietor and the private limited company, declaring that all the assets are to be transferred to the latter.

Conversion of Sole Proprietorship to LLP

Why convert proprietorship into LLP?

Advantages of both a company and a partnership firm are available in a LLP. By converting one’s business into LLP, the sole proprietor will be able to distribute the risks that were earlier borne by him alone with his partners. LLP allows a proprietor to set up a business which has a distinct legal identity and a limited risk.

Procedure for Conversion

A sole proprietorship cannot be converted into a LLP. Therefore, a new LLP has to be incorporated which will take over the sole proprietorship business. Steps to incorporate a LLP are:

• Application for DIN or DPIN: All the partners are required to get DPIN(Designated Partner Identification Number). DIN can be used if a partners possesses DIN.
• Acquire/ Register DSC: Digital Signature Certificate should be obtained and should be registered with the LLP Application.
• Incorporate a LLP: Form1 to be filled for Name confirmation and form 2 should be filed for Incorporating an LLP after the Name is confirmed.
• File LLP Agreement: After incorporation of LLP, an initial LLP agreement is to be filed within 30 days of incorporation of LLP.