Before initiating the conversion of a proprietorship into a private limited company, the proprietor must ensure compliance with the following requirements:

• Agreement: An agreement should be entered between the sole proprietor and the private limited company, outlining the terms and conditions of the conversion. This agreement may include details such as the transfer of assets and liabilities, valuation of the business, and other relevant words.
• Memorandum of Association (MOA): The MOA of the Private Limited Company must include an object clause that explicitly states the intention to take over a sole proprietorship concern. This inclusion ensures legal clarity regarding the conversion process.
• Transfer of Assets and Liabilities: All the assets and liabilities of the proprietorship firm must be transferred to the company. This transfer should be appropriately documented and recorded to ensure a smooth transition.
• Directorial Board and Shareholding: The sole proprietor should become a part of the directorial board of the private limited company. They must hold a minimum of 50% of the voting power in the company. It’s important to note that a company must have a minimum of two directors as per the incorporation rules.
• Minimum Share Capital: The incorporation rules of a private limited company mandate a minimum share capital requirement of Rs 1 00,000 (or the applicable currency equivalent). The proprietor must ensure compliance with this minimum capital requirement during the conversion process.