• Proprietor to Private Limited - Government Works

We want to convert our Proprietorship to a Private Limited under the same name as the existing company. Since we execute Government works and have been doing so for more than 10 years and there is a qualification criteria for Government tenders, can we continue to use the Proprietorship credentials to continue to qualify for the tenders although it will be converted to a Private Limited or will be treated as a fresh new company by the Government agencies?
Asked 1 year ago in Business Law from Bengaluru, Karnataka

Yes it will treated as a fresh company because certificate of incorporating is having present date.

Better u could continue as proprietary concern not as company if u want experience.

Hemadri Chandrakanth
Advocate, Vijayawada
98 Answers
7 Consultations

4.0 on 5.0

You may not get the same name on conversion of proprietorship concern to pvt ltd company

2) proposed company name must not be identical or similar to an existing company or LLP or trademark.

3) you can use the credentials of proprietary concern to qualify for govt contracts if permissible as per tender conditions

Ajay Sethi
Advocate, Mumbai
69070 Answers
4155 Consultations

5.0 on 5.0

1. If the name is available for registration under Companies Act then you can do so.

2. For registration of a new company there are many compliance which you are required to do apart from apply for DSC, DIN, TIN, GST etc. There are many professionals who assist in forming a new company.

3. Well there is no way by which one can convert proprietary firm to company. Formation of company is a fresh start in which the property owned by Proprietary firm can be used as company office.

4. Yes this would be treated a fresh start and business carried on by the proprietary firm would not be counted here.

Devajyoti Barman
Advocate, Kolkata
18131 Answers
260 Consultations

5.0 on 5.0

This is my response to you:

1. Once it is converted into a private company it is a new entity altogether;

2. Therefore you will need to register it differently with the ROC;

3. You will need to speak with the government agencies with how it would affect your tender processess.

Gowaal Padavi
Advocate, Mumbai
1844 Answers
2 Consultations

5.0 on 5.0

Choosing an acceptable name is one of the first step in registering a company in India. So to ensure that the proposed name selected does not contain any word as prohibited in Section 4(2) & (3) of the Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014.

The new company is treated as new one. So continue the Proprietorship concern, if needed register new company.

For converting a Proprietorship Firm into Company, few legal formalities & compliances needs to be complied with. After the formation of company, an agreement has to be executed between the Proprietorship and the Private Limited Company. Mention take over as one of the objectives in its Memorandum of Association. All the assets or liabilities of the old sole proprietorship firm will become the assets of the new private limited company

Ajay N S
Advocate, Ernakulam
3187 Answers
65 Consultations

5.0 on 5.0

Dear Sir

Based on the information provided above we want to understand in depth the reason for which you want to convert. There are other options in law like LLP, LLC etc. We want to educate you on this line and give all the options of benefits and compliances. You can choose suitable one to your business.

Feel free to reach us for any assistance.

Regards

Shettar

Shettar SS
Advocate, Bangalore
182 Answers
1 Consultation

4.0 on 5.0

There would be clause in tender regarding eligibility conditions ti be fulfilled by bidders

There must be clause that if you had previous experience you would be eligible even if you carried on government works in any other manner

Ajay Sethi
Advocate, Mumbai
69070 Answers
4155 Consultations

5.0 on 5.0

The new change in name is not make a rejection in the Government Tenders . But new company is treated as new company.

Ajay N S
Advocate, Ernakulam
3187 Answers
65 Consultations

5.0 on 5.0

Hi,

While I cannot comment on the terms of the Tender without looking at the fine print. However, keeping the simple case of converting the proprietorship to company, in my view, you need to have the following:

(a) A new private company;

(b) Continuity of business from the proprietorship to the said company.

I assume you already have a private limited company in place. The second stage will be to transfer the business of the proprietorship to the private limited company. You can have a Business Transfer Agreement (BTA) which will specify that the business of the proprietorship will be transferred to the company "on a going concern basis". The transfer will include transfer of licenses (this may include surrender by proprietorship and the company taking a new one, depending on the license in question), lease etc.

Assuming in tenders you need to provide your past credentials, then you can submit the BTA along with the credentials of the new company (Certificate of Incorporation), detailing the past projects. The idea is to retain the connect with the previous avatar of the company.

Hope the above helps.

Regards,

Prashant Kumar
Advocate, Bangalore
15 Answers

4.0 on 5.0

1. a private limited company is a separate and distinct legal entity

2. it is separate and distinct from the proprietorship

3. even if you use the same name as that of the proprietorship, by adding the words Pvt. Ltd., after the name, the situation will not change i.e. both the entities will be considered as different and separate from each other

4. so the effect will be that any tenders awarded to the proprietorship prior to its conversion into a private limited company, cannot be extended and applied to the private limited company and thus cannot be considered as tenders awarded to the private limited company

5. it is advisable that you consult the concerned government department and discuss the conversion proposal and see if any concession can be granted by the government to the private limited company so formed and apply and treat all tenders awarded to the proprietorship as tenders awarded to the private ltd. company

Yusuf Rampurawala
Advocate, Mumbai
4673 Answers
28 Consultations

5.0 on 5.0

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