AGREEMENT FOR CONVERSION OF A PRIVATE LIMITED COMPANY INTO A PARTNERSHIP
AGREEMENT is made at... this .., day of 20……….between (1) Mr............................. residing at ... of the One Part, Mr. ....................... residing at ... of the Second Part and Mr. ........................residing at ... of the Third Part as follows:
1. ..............................& Co. Pvt. Ltd-, is a private Company limited by shares and registered under the Companies Act, 1956.
2. The Parties hereto are major shareholders of the said Company, holding more than two third of the share capital of the Company and they are also the only Directors of the said Company.
3. The parties hereto propose to convert the said Company into a partnership between them and to carry on the business of the Company as a partnership business.
4. The other minority shareholders have expressed their willingness to the said proposal.
5. The parties, therefore, propose to enter into this agreement recording the terms and conditions agreed upon between them.
NOW IT IS AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:
1. The parties hereto will purchase the shares held by the other share holders at a valuation to be fixed by the Chartered Accountants of the Company, in the same proportion or ratio in which they are now holding shares in the Company.
2. The Parties agree and undertake that they will convene a special meeting of the shareholders of the said Company on the ... day of ... by giving notice to all the share holders of the Company as required by law to consider and If thought fit to pass a special resolution for voluntarily winding up of the Company and the parties hereto agree and undertake to support such resolution.
3. It is agreed that one of the partners of the Firm of the Chartered Accountants of the Company M/s ... will be appointed as a liquidator of the said Company, who will take all steps necessary to wind up the said Company and for that purpose the Liquidator will be authorized by the resolution of the Company appointing him as such, to distribute the assets of the Company among the parties hereto in proportion to their respective share holdings in the Company, including all cash balances, amounts in bank accounts and which assets including cash will be held by the parties hereto on trust for the benefit of the proposed partnership between the parties hereto.
4. As regards debts and liabilities of the Company, the parties hereto agree to negotiate and to enter into agreements with the creditors under which the debt and liabilities will be taken over by the parties hereto personally and as partners of the proposed firm and the Company will be discharged of such debts and liabilities.
5. The Liquidator will recover the debts and liabilities due to the Company and where such recovery is not possible, the Liquidator will execute a deed of" assignment of such debts and liabilities in favor of the partnership of The Parties hereto as a part of the distribution of the assets of the Company as aforesaid.
6. All expenses of the winding up including the remuneration of the Liquidator will be met and paid out of the assets of the Company before distribution thereof as aforesaid.
7. During the liquidation proceedings and until transfer of the assets of the Company to the parties hereto, they or any of them will not transfer their respective share holdings or create any encumbrance thereon.
8. After the winding up is complete and the assets are taken over by the parties hereto, they will enter into an agreement of partnership and carry on the same business as that of the Company with the said assets. The shares of the parties hereto in the assets, profits and losses of the partnership will be in the same proportion in which the parties hereto are holding shares in the said Company. The draft of the proposed partnership is prepared and approved in anticipation and the Deed of Partnership will be executed in terms of the said draft and until execution of such deed, this will be treated as a partnership deed read with the said draft which will be deemed to form part of this deed.
9. If any formal document is required to transfer the assets of the Company to the Partnership, the Liquidator will be authorized to do so and he will execute such document.
IN WITNESS WHEREOF the parties have put their hands the day and year first hereinabove written.
Signed and delivered by the within named Mr. .................., Mr. ........................, and Mr. ...................., in the presence of……………