Generally, in small private companies there is no outsider shareholders and mostly family owned businesses. So there is no requirement to have a tribunal oversight and approval on the merger between such types of small companies. As a result new Companies Act provided separate process for mergers between small companies.

Check whether each Transferor and Transferee Company’s Article of Association (AOA) permits for mergers and amalgamation. If not, then alter AOA first.

Appoint at least 2 valuers for valuation of shares of each Transferor and Transferee Companies. (Not Mandatory Requirement)

Prepare draft scheme of merger, exchange ratio based on valuation.

Convene Board Meeting by each Transferor and Transferee Companies to get the approval of Board of Directors of each companies.

After the approval of Board of Directors of each Company, the notice of the proposed scheme inviting objections or suggestions, if any, shall be sent by each transferor and transferee company in form CAA-9 to the Registrar of Companies (ROC) and Official Liquidators (OL) where the registered office of the respective companies are situated along with a copy of the Scheme.

Upon The registration of the scheme, Transferor Company shall be deemed to have the effect of dissolution without process of winding-up.

You may consult a local consultant and tek his assistance on all such further process

1. Get appointed as Director in ABCD Pvt Ltd (file Form DIR-12)

2. Transfer XYZ Solutions business to ABCD Pvt Ltd through a business transfer agreement

3. Use "XYZ Solutions" brand name under ABCD Pvt Ltd operations

4. Update registrations: Modify GST, transfer licenses, notify banks/customers

Why This Works:

• Preserves XYZ Solutions brand name

• Uses existing company structure (cost-effective)

• Maintains business continuity

• Simple legal process

Result:

You control both businesses under one company (ABCD Pvt Ltd) while keeping the growing XYZ Solutions brand intact.

You should incorporate new company transferring the business assets and liabilities,of proprietary concern t new company 

2)execute sale agreement to transfer the assets and liabilities of the proprietorship to the newly formed company. 

You have to become director in the first company: you can’t take over proprietary concern as it’s not a legal entity different from its owner. Therefore you need to first convert that proprietary concern to llp or limited company 

Take Over options

a. Become Director in ABCD Pvt. Ltd. & merge XYZ Solutions business – Yes, doable. Appoint yourself as Director via Board & ROC filings (DIR-2, DIR-12). You can operate XYZ Solutions brand under ABCD by registering it as a trade name or brand of ABCD. Ensure GST amendment to reflect brand usage.

b. Convert Proprietorship to Pvt. Ltd. – Possible under Company Incorporation Rules by forming a new Pvt. Ltd. with the same name (subject to MCA approval). Apply for name reservation (RUN), incorporate, transfer assets/liabilities, update GST, and trademark the brand to secure exclusivity.

c. Close both & start third company – Not advisable unless debts/obligations make ABCD unviable. Bankruptcy involves NCLT process, compliance costs, and can affect creditworthiness. Brand can be retained only if you register it as your trademark before closure, then assign to new entity.

d. Better Way – Convert XYZ Solutions into a Pvt. Ltd. in your name, trademark the brand, keep ABCD Pvt. Ltd. alive until natural closure to avoid abrupt losses.

Broad Procedure (for best route – converting XYZ Solutions)

1. Apply for name approval (same brand).
2. Incorporate Pvt. Ltd. (SPICe+ Form).
3. Transfer assets, contracts, and GST registration.
4. Trademark brand to secure legal rights.
5. Gradually wind down ABCD Pvt. Ltd. post liabilities clearance.

Pls connect for further assistance 😊

2) you will need to close your existing account and open a new business bank account 

Yes compliance part needs to be fulfilled else it can affect later under scrutiny 

It is essential to create a private limited company /firm to convert the proprietorship entity into a private limited  firm and obtain the private limited  firm’s PAN, GST registration and bank accounts. Once the private limited firm  is ready, the taxpayer has to apply for the PAN number with the income tax department as it is a mandatory prerequisite to apply for registration under GST. Once the pending returns were filed, and all tax dues have been paid off, request for the cancellation of the GST registration in Form GST REG 16 citing reasons as ‘Changing the company’s legal framework’. It will also ask for the new private limited  firm’s GST number.

The bank account imay have  to be opened on the name of the newly formed private limited firm's name.

Convert XYZ Solutions to Private Limited and sell ABCD Pvt Ltd to avoid compliance burden while maximizing value.

XYZ Solutions Conversion to Pvt Ltd

GST & Banking - Fresh Start Required

GST: New registration needed (existing GST cannot be retained)

• Cancel proprietorship GST after conversion

• Apply for fresh GST with company PAN

Bank Account: Must open new corporate account

• Close existing proprietorship account

• New account in company name mandatory

ABCD Pvt Ltd - Best Exit Strategy: SELL

Why Selling is Optimal

Your advantages:

• ₹5 crore turnover + 12-13 years positive financials = attractive to buyers

• Strong government credentials add value

• Complete liability transfer (BGs, SDs, court cases) to buyer

Cannot Keep Bank Account After Closure

Your plan to close GST/ROC but keep bank account = Not legally possible

• Bank accounts require active legal entity

• All BGs/SDs must mature before company can be closed

• Keep ABCD active until 2028/2029, then close

Abrupt Closure Consequences

Directors face personal liability for:

• Unpaid taxes and statutory dues

• Ongoing court cases

• Credit rating damage

• Legal penalties for non-compliance

Given your situation, the most prudent course would be to retain ABCD Pvt. Ltd. as a separate entity and allow it to wind down naturally while focusing on converting XYZ Solutions, the growing proprietorship, into a private limited company in your name. This will allow you to keep the “XYZ Solutions” brand intact, bring yourself in as director and shareholder, and ring-fence liabilities so that ABCD’s declining operations do not impact your growth business. The conversion can be achieved by incorporating a new private limited company with the same (or MCA-approved variant) name, executing a Business Transfer Agreement from the proprietorship to the new company, transferring assets, goodwill, and GST registration, and assigning or licensing the brand name to the company. This route avoids unnecessary bankruptcy proceedings, ensures business continuity, and provides a clean legal structure for future expansion while meeting all statutory requirements.

Thanks and Regards,
Advocate Aman Verma
Legal Corridor

Given your background and business situation, the most pragmatic approach is to proceed by appointing yourself as a Director in ABCD Private Limited while keeping it active to service existing government contracts and manage ongoing liabilities such as bank guarantees, security deposits and fixed deposits. You can, in parallel, convert the proprietorship concern XYZ Solutions into a private limited company to retain and grow the brand. This will allow you to enjoy the benefits of a corporate structure while preserving brand continuity.

In order to be appointed as a Director in ABCD Private Limited, a board resolution would need to be passed and filed with the Ministry of Corporate Affairs through the prescribed e‑forms. If the nature of business in ABCD Private Limited will change to incorporate services or products offered by XYZ Solutions, the Memorandum and Articles of Association may need to be amended accordingly through special resolution and MCA filings. Trademark registration for the XYZ brand is advisable to safeguard its identity in both entities.

For conversion of XYZ Solutions into a private limited company, you will need to incorporate a new company under the Companies Act, 2013 using the proposed name “XYZ Solutions Private Limited” subject to MCA approval. This will require a new Permanent Account Number (PAN), Goods and Services Tax (GST) registration and separate bank accounts because GST registration and bank accounts in the proprietor’s name cannot be transferred to the new legal entity. Once incorporated, assets, contracts, and goodwill of the proprietorship can be transferred to the new company through a business transfer agreement, and the proprietorship GST registration can be voluntarily surrendered.

It is not possible to formally close ABCD Private Limited while active bank guarantees and related security deposits/liabilities remain with government departments or banks. Closure, whether by striking off or winding up, requires that the company have no outstanding commitments. Further, after legal closure, a bank account cannot remain operational because the corporate personality ceases to exist. Any obligation under BGs will need to be completed, transferred to another entity, or replaced by the beneficiary before the company can be wound up.

If disposal of ABCD Private Limited before liabilities end is desired, a more viable alternative may be to sell the company by transferring all shares to a buyer willing to take over both the assets and the liabilities. Such sales can be carried out through direct agreements after due diligence. While there are no official government exchanges for such sales, private platforms and specialised M&A advisors often facilitate such transfers. This may allow you to step back from operational responsibilities while the entity continues to discharge its obligations.

Abrupt closure without full settlement of statutory compliances and liabilities is not advisable. Pending GST filings, ROC filings, income tax returns, and unresolved legal disputes may result in penalties, prosecution, and personal liability for directors under various statutes, including the Companies Act, 2013 and tax laws. Even after removal of your name from the board, regulatory or judicial proceedings initiated for non‑compliance during your tenure can be pursued against you personally.

In summary, the optimal course is to retain ABCD Private Limited as an operational entity until all contractual and financial obligations are discharged or transferred, while separately converting XYZ Solutions into a private limited company to build and safeguard that brand for the future. This ensures compliance with corporate, tax, and contractual laws while achieving your business continuity objectives.

You can contact the potential buyers through many apps online who offer the services 

Platforms like Indiabizforsale, MergerDomo, BusinessDeals, and SMERGERS provide listings and services for buying and selling businesses,

To sell a private limited company in India is a complicated and different process. It requires careful planning, well-structured planning and management, legal compliance, proper execution, and perfection to protect the interest of the parties because it is very much essential to protect it. Whether you are exiting the business for financial gains, moving to a new venture, or looking for a merger, it is crucial to understand the steps involved because it is very important to understand.

Several reliable platforms facilitate the sale of private limited companies in India. Platforms like BusinessDeals, BusinessEx, and MergerDomo specialize in connecting businesses with potential buyers, offering services like business valuation, marketing, and due diligence support. Additionally, platforms like Stockify focus on unlisted shares and pre-IPO opportunities.

Use LinkedIn groups, CA/CS networks, and industry associations to reach potential buyers directly.

Given your situation, the advisable approach is to appoint yourself as a Director in ABCD Private Limited to manage ongoing government contracts and liabilities, while converting your proprietorship, XYZ Solutions, into a private limited company to protect and grow its brand.

To become a Director of ABCD Pvt Ltd, a board resolution must be passed and filed with the Ministry of Corporate Affairs (MCA) via the prescribed e-forms. If you plan to incorporate XYZ Solutions’ business into ABCD Pvt Ltd, the company’s Memorandum and Articles of Association will need amendment through a special resolution and filed with MCA. Registering the XYZ Solutions brand as a trademark is recommended for protection.

Conversion of XYZ Solutions (proprietorship) to a private limited company requires incorporating a new company under the Companies Act, 2013, including obtaining new PAN, GST registration, and opening new bank accounts—these cannot be transferred from the proprietorship. After incorporation, assets, contracts, and goodwill can be transferred via a business transfer agreement. The proprietorship’s GST registration should then be voluntarily surrendered.

ABCD Pvt Ltd cannot be closed while active bank guarantees, security deposits, and liabilities remain. Closure requires settlement or transfer of all obligations. Bank accounts cannot remain active post-closure. If you want to exit ABCD Pvt Ltd before liabilities end, consider selling the company by transferring shares to a buyer willing to assume those liabilities. Though no official government platform exists for such sales, private online portals and company sale marketplaces can help you find buyers cost-effectively.

Abrupt closure without clearing statutory compliance or ongoing litigation risks penalties and personal liabilities for directors under Companies Act and tax laws.

In summary, keep ABCD Pvt Ltd active to manage obligations while building XYZ Solutions as a private company. This method ensures legal and financial compliance while achieving your goals.

Regarding platforms to sell your company inexpensively, you may explore popular online marketplaces such as:

• IndiaFilings

• MergerNetwork

• BizBuySell (international platform)

• Local startup/SME forums and classified portals

These offer more cost-effective solutions compared to expensive M&A advisory firms.

If you need help with the director appointment process, company incorporation, or company sale documentation, you or your representatives may contact me for tailored legal assistance.

This advice is based solely on the information provided by you and is limited to the facts as stated. It is confidential and protected under attorney-client privilege.