Legal Question in Business Law in India
can a proprietary firm in india be converted into a firm run by same prop, as karta? can a loan be granted by banks to such converted firm? what about the liabilities of previous firm?
1 Answer from Attorneys
29.01.2015
Dear Sir / Madam,
Yes, A sole proprietary concern headed by the karta of the HUF can be converted into a partnership firm with the admission of other members of the HUF. If the sole proprietary concern has presently availed of facilities, banks will consider granting of a top up loan to the partnership firm based on an assessment of the securities and personal guarantees that the members other than the karta of the HUF offers to the Bank. The liabilities of the sole proprietary concern become the liabilities of the newly formed partnership firm in the HUF.
Regards,
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