Conversion of OPC to Private Limited
What is the Conversion of One Person Company?
Company conversion means the conversion of the company from one type to another type of company. A one Person Company (OPC) can be converted into a normal Private Limited or Public Limited company by way of voluntarily conversion or mandatorily conversion.
Conversion of a One Person Company (OPC) into a Private Limited Company
The conversion of an OPC- One Person Company into Private Limited Company is possible and need to follow the provisions of Companies (Incorporation) Rules of 2014, in particular the Rule 7(4) of the Companies (Incorporation) Rules, 2014 and Section 18 of the Companies Act, 2013. We can convert OPC to Private Limited voluntarily as well as mandatorily (as required by the department). In both the conversion process it’s mandatorily required to alter the MOA and AOA of the OPC (As per the guideline of section 18 of the Companies Act, 2013, along with section 122 of the Companies Act 2013.
Following documents should be required for conversion of One Person Company (OPC) into Private Limited Company:
• ID and Address proof of Directors;
• MOA and AOA of the company;
• COI of the company;
• Audited Financials of the Company;
• NOC from the Creditors and Members of the company;
Basic conditions to convert OPC into Private Limited (Voluntary)
Voluntary conversion of One Person Company into a private or public limited company should be possible, only if a period of two years of its incorporation of the OPC (two years counted from the date of incorporation of the OPC) has been passed. The process and Provision of voluntary conversion of an OPC into a private limited company are as under:
• The existing OPC which we want to convert must have the total paid-up capital less than or equal to the INR-50 Lacs; and during the past three immediately preceding years and consecutive financial years its average annual turnover, should be less than or equal to the INR-2 Crores, at the time of conversion of One Person Company to Private Limited Company.
• The OPC shall require to obtain “No Objection” in written form, from its members and creditors of the company.
• To convert OPC to private limited it must have two directors and two members.
• The Company also needs to pass a special resolution in the general meeting in support of its conversion. The copy of such resolution shall need to submit with the concerned ROC within Thirty Days by way of filing Form MGT-14, after getting approval of form MGT-14, application in Form INC-6 is also need to submit with the following attachments:
I. A solemn declaration of the director of OPC
II. List of members and list of creditors if any.
III. A copy of No Objection letter from creditors
IV. The latest audited balance sheet on the profit and loss account
Compulsory conversion of OPC to Private Limited
As per the Rule 6 of the Companies (Incorporation) Rule, 2014 & and conversion of One Person Company to Private Limited Company is mandatorily required under the Companies Act, 2013 if:
I. OPC has paid-up share capital that exceeds Rs. 50 lakhs and
II. The yearly turnover of immediately previous three consecutive financial years is more than 2 Crores rupees,
Then it is mandatory for Such company has to compulsorily convert into a private or public limited company within 6 months from the date when the paid-up share capital exceeded 50 lakhs rupees or the last date of the related period in which the average annual turnover of immediately previous three consecutive financial years exceeds the limit of INR 2 Crore.
For Compulsory conversion its require to pass a special resolution in the general meeting of the company, to take NOC in written from the creditors of the company, and the other members before the resolution are passed and also need to submit form MGT-14 with the concerned ROC.
Form INC-5 also needs to submit with the department within sixty days of exceeding threshold limits and after getting the approval of form MGT-14 and form INC-5, its shall also be required to submit form INC-6 with required attachments with the department within six months of mandatory conversion to convert OPC into Private Limited.
Note: Once all the forms submitted with the MCA department the Registrar will issue a new certificate of incorporation only after checking the forms and satisfying himself about the compliance with relevant provisions of the Companies Act 2013 and other applicable provisions and laws.