Movement of Employees from Sole Prop to Pvt Ltd - CiteHR
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Manish.hrmir
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For an Organization that has moved from Sole Proprietorship to Pvt. Ltd. , what is the best procedure to move the Employees. The name of the Sole Prop Org and Pvt Ltd are also different. Please help
Is the registration, MoU and MoA is also different for the Organisation!
Yes They are Different with different names. Owner of the both the Companies are same. For Sole Prop all these were not needed. But for the Pvt Ltd , had to go for MoU and other MoA
In many of such instances employees of erstwhile firm are deprived of service continuity. Therefore employees concerned should ensure their past service is continued without break.
Matters concerning the firm (general compliance, specifics will vary):
1. All registrations such as - i) Regn.of firms certificate ii) PAN & TAN & GST, PT iii) Regn.under Shops & Commercial Estt.Act (Labour Licence) iv) MSME certificate etc, if applicable have to be obtained;
2. Ensure all your clients are notified and regularisation of PO/WOs in the new firm's name is obtained to continue your business without any break;
3. Appointment to Auditors
4. EPF/EPS/ESI registration & obtain new No.
5. Banking formalities
6. IEC (Importer & Exporter's code)
7. Rental & other services agreements change over etc.
8. At the corporate level, Partners' accounts & their roles have to be spelt out in the MoA. This will also call for due authorisation & delegation of power amongst partners.
9. Regularisation of employees' agreements - there are few methods- i) Issue fresh appointment orders in the new firm's name ii) Proper options should be obtained in writing from all the employees to change over iii) Alternatively, close the services in the erstwhile firm by proper settlement (which is unlikely option from employees' side) so that the new firm will have everyone afresh, with or without modifications in terms & conditions. This option route is a better option as some may opt to exit and therefore litigation could be minimised.
10.If it's going to be LLP entity there are certain compliance which have to be fulfilled.

Thanks Kumar S. That was a lot of help.
So if my understanding is correct. If all Employees Resign from the Previous Entity ( Sole Prop) , we accept the same and We issue a New Appointment letter bearing our new company name. This should be fine

Mr.Anant Pradhan,
Re:Your stand and view point, there is a word of caution. In the option of enforcing, virtually, to resign en masse, might cause some unrest in employees, especially those put in considerable yrs.of service. Some may not be willing to resign, instead might insist on regularisation or like a migration/transfer of past service into new entity. Therefore, it would depend on the mind set of employees and resultant payouts if any like settlements towards EPF, Gratuity, bonus etc. So you have to necessarily take these into consideration before finalising your 'modus operandi' a frame work. Possibly, there could be division among your employees, no consensus. I would suggest an 'option' route to bifurcate between them and take a call depending the ground reality.

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