Agreement among partners of a partnership firm for formation of a company
Responsibility of incorporation
The responsibility of incorporating a new company can be given to one of the parties or to all the parties jointly. Normally it is given to one of the parties, whereas other aspects of registration are taken care of by the remaining parties to agreement.
New company incorporation
If the new company is registered as a public limited company the only members are being the firm partners and they are should not be less 7 in number. If the new company is formed as a private company, the only subscribers being the partners of the firm should not be less than two.
Subscribers must agree to take at least one share each in the MOA initially, but they can also agree to take more than one share under section 2(68) of the act 2013. A private limited company may have such amount of minimum paid-up share capital as may be mutually decided by the subscribers as need of having Rs.1 lac as minimum paid-up share capital has been dispensed with.
Denomination of shares
Shares may be comprising of denomination of Rs.10 or Rs.100 or of any denomination, but should not be less than Rs.1 per share. Denomination of shares can be decided by and between the promoters before entering into this agreement suitable to their purpose or needs at a later date.
Classification of shares
Section 43 of the 2013 act allows share capital of a company limited by shares to be of two types equity share capital and preference share capital.
Appointment of Directors
Directors can be appointed by the articles of association of a company or where no condition is made in the AOA for the appointment of first director. The subscribers to the memorandum who are individuals shall be considered to be the first directors of the company until the directors are duly appointed.
Before entering into this agreement, the four partners should have a preliminary scheme for conversion into a company the business carried on by the partners. This scheme should contain all the conditions relating to name- share capital, MOA, first directors of the company, sale business of the partnership firm, payment of purchase price etc.
Availability of name
First and Foremost a name should be made available from the ROC. Subscribers may avail the name and simultaneously incorporate a new company by creating an application electronically in a single integrated e-Form INC-29 with a fee of Rs.2000/- to be paid both online and offline.
Draft Agreement among partners of a partnership firm for formation of a company to need their business of partnership
Whereas the parties have agreed to form a company to be registered under the act 2013 for the purpose of acquiring as a going concern the business of legal and financial consultancy.
Whereas the parties have in principle made up their mind to carry on the business in the same way, only through a registered company to take advantage of limited liability.
Now, therefore it is hereby agreed as follows:
The parties shall forthwith procure from the ROC in Chennai (the incorporation of a private company limited by shares (referred to as the company) having an authorized share capital of Rs.5 lakhs divided into 25,000 equity shares of Rs.10.
The valuation of the business of the said partnership together with its assets, stock in trade and goodwill containing book debts but subject to liabilities will be gained from CA of the said partnership firm. The equity and preference shares in the company capital will be assigned to the parties. The consent of the creditors has been gained by the partnership firm for company registration.
The company shall be called “ABC Company Private Limited” or ABC Consultancy Private Limited or ABC Financial Services Private Limited or ABC and Company Private Limited whichever name is made available by the ROC.
Mr. RST, Mr. PQR and Mr.XYZ shall be the first directors of the company quickly after incorporation and registration. Thereafter, the company directors shall be appointed as per the conditions of section 152 of the act. The maximum number of company directors shall not exceed 15 which may further increase by special resolution.
Immediately upon company registration, after the business of the partnership firm is transferred to the company. The partnership firm shall stand dissolved and no party shall have any liability against one another.
The association shall be the first directors of the company quickly after registration and incorporation. So, the company directors shall be appointed under section 152. The maximum number of company directors shall not increase 15 as mentioned in section 149.
The company shall after its registration make simultaneous allotments of shares to be allotted to them respectively in accordance with the conditions of the sale agreement.
The initial expenses need for company registration will be contributed by the parties in proportion to their shareholdings in the company.
Nothing herein included shall in any way affect the free exercise by any person of his powers as a company director.
Any pending litigation against the name of the partnership firm would be transferred against the company ans shall be proceeded or defended with by the company or its name through the authorized representative.
After registration, the company shall adopt this agreement in this first board meeting held thereafter.