Form URC-1: Registration of an Existing Entity as a Company under Section 366

What URC-1 does

Section 366 allows certain existing entities to register as a company. This is often called conversion, but legally it is a registration under Part I of Chapter XXI. On registration, the property and liabilities of the old entity vest in the company under Section 368, and the old entity is dissolved, with LLPs deemed dissolved under Section 374.

Eligible entities include partnership firms, LLPs, cooperative societies, registered societies and other bodies formed under another law. A sole proprietorship cannot use URC-1, because it has no separate members; it becomes a company through a business transfer to a new company instead.

Conditions to meet

The entity should have at least two members. If it has fewer than seven, it registers as a private company. The type can be a company limited by shares, limited by guarantee, or unlimited, and charitable entities may register as Section 8 companies.

• Approval by members in a general meeting, with at least three-fourths of members present approving where a limited company is sought
• No-objection from secured creditors and charge holders
• Publication of notice in Form URC-2 in one English and one vernacular newspaper, inviting objections within 21 clear days
• For share capital companies, a fixed capital divided into shares
• No pending e-forms against the LLP, where an LLP is converting

Attachments

The Registrar needs to see the entity's constitution and its current financial position, and evidence that members and creditors agree. The URC-1 form also captures details of the members and proposed first directors, who must give DIR-2 consent and hold or obtain a DIN through SPICe+.

• Partnership deed, LLP agreement or society memorandum, and registration certificate
• List of members with shareholding proposed
• Members' resolution approving registration
• Creditors' consent or NOC
• Statement of accounts made up to a date within 15 days before the application, certified by an auditor
• Copies of URC-2 advertisements and any objections received
• Details, consents and declarations of first directors

Fees and processing

URC-1 itself carries the document filing fee of ₹200 to ₹600 based on proposed nominal capital, or ₹200 for a company without share capital. SPICe+ and its linked forms carry their own fees and state stamp duty.

URC-1 is processed in non-STP mode. The Registrar examines the application and may ask for resubmission. On approval, a certificate of incorporation is issued in Form INC-11. The same MCA user must file SPICe+ Part B and URC-1.

Common mistakes

Plan the change carefully for tax and contracts. Existing contracts, licences and registrations may need novation or fresh applications in the company's name, and lenders typically need to consent. Partners become shareholders broadly in proportion to their capital accounts, which should be agreed before the application is drafted.

Typical problems include a stale statement of accounts, missing creditor NOCs, URC-2 published in only one newspaper or without the 21 clear days elapsing, and the LLP having pending filings. After registration, update PAN, GST, bank accounts and licences to the company's name, and inform the registrar of firms or the LLP records as required. Tax neutrality conditions under income-tax law should be checked before conversion. Refogo's partner professionals can handle partnership or LLP to company conversion for a fixed fee.

Step by step

1. 1Check eligibility

   Confirm the entity type and number of members.

2. 2Approve in a meeting

   Members approve registration as a company by the required majority.

3. 3Obtain creditor consent

   Collect NOCs from secured creditors.

4. 4Publish URC-2

   Advertise in English and vernacular newspapers and wait 21 clear days.

5. 5Prepare accounts statement

   Get an auditor-certified statement within 15 days of filing.

6. 6File SPICe+ with URC-1

   Reserve the name, then file SPICe+ Part B with URC-1 and linked forms.

7. 7Receive INC-11

   On approval, update registrations to the company's name.