Benefits of Conversion of a Firm Business to Company
A company is registered under the legislation and thus becomes the legal entity. Typically, the companies are registered as Private Limited Company, shortly written as Pte Ltd Company, or Public Limited company, written as Public Company. The legislation provides different provisions for the incorporation and operation of these companies, but there are few things in common also.
A private company can change its registration profile from private to public, but vice versa is not allowed. A private company cannot make a public issue without conversion to a public company.
Change of business from firm to a company
The company legislation is a comprehensive independent Act that deals with various provisions of company incorporation, operation, and dissolution (also called strike-off). The companies, whether private or public, are unique legally regulated entities that cannot make their all decisions on their own. They are required to make compliance with the regulations prepared under the legislation.
A partnership firm can decide to add the words “Private Limited” against its name, but it has to approach the competent department of the government to convert the firm into a company.
Benefits of corporatization
When a firm wants to convert to Pte Ltd Company, it will be referred to as corporatization. This has become the need of the hour because many progressive firms are looking to make entry into the corporate world which is an impressive scene in the modern time of globalization. Corporatization has its own advantages such as Limited Liability, Perpetual Succession, easy access to funds, etc.
The assets and liabilities of the firm are transferred as the assets and liabilities of the company. and all movable and immovable properties of the firm are acquired by the company. The transfer of property takes place without any taxation issue. Unabsorbed Depreciation, Carry Forward and Set off Losses also move to the successor company.
How a business enjoys corporatization
A firm might have its goodwill and made its brand value, and now it has legal recognition. Thus, the new business value escalates with a blend of the intact history and legal recognition due to conversion to a company. Moreover, a Pte Ltd company gets more benefits compared to a Public Limited company under the legislation.
A business with its legal status can make a better move in the future and the clients deal with the company with higher trust. Many firms convert to Pte Ltd Company to avail the benefits and to enhance their status.
Dealing with the company strike-off situation
The legislation allows another advantage of dissolving a company, also known as striking off when it is not feasible for the company to operate further due to several reasons. This is a simple and cost-effective way to close down and retain full control of the business as directors, except that the liabilities towards the creditors must be discharged.
The company strike-off process is usually time-consuming and complex, but a company may seek the support of the Strike-Off Company Services in dissolution matters. The experts in a strike-off service are well-versed to handle tough situations in an expeditious manner, and it becomes much easier for the company to come out of the intricacies without a hassle.