Company conversion means, conversion from one type of company to another type of company. A One Person Company (OPC) can be converted lawfully into a Private Limited or Public Limited company, voluntarily or mandatorily.
The conversion of an OPC- One Person Company into Private Limited Company as per Section 18 of the Companies Act, 2013 and the provisions of Companies (Incorporation) Rules of 2014, in particular the Rule 7(4) of the Companies (Incorporation) Rules, 2014, needs to be followed. There are two ways of converting an OPC into a private limited company either voluntarily or mandatorily. Under both these type of conversions, the requirements are necessary alterations in the MOA and AOA of the OPC (As per the provisions provided in section 18 of the Companies Act, 2013, along with section 122 of the Act.
What is the basic requirement for Voluntary conversion of OPC to Private Limited?
Voluntarily an OPC cannot be converted into a private or public limited company, within two years of its incorporation (counted from the date of its incorporation). For voluntary conversion of an opc into a pvt ltd company, the provisions and processes are the following:
1.The existing OPC must have the total paid-up capital less than or equal to INR-50 Lacs; and its average annual turnover during the past three immediately preceding and consecutive financial years, should be less than or equal to INR-2 Crores, at the time of conversion.
2. The OPC shall obtain "No Objection" in written form, from its members and creditors.
3. To pass a special resolution in the general meeting in support of its conversion. The copy of such resolution must be sent to the concerned ROC within Thirty Days through the Form No. MGT-14. Filing Form INC-6, the Application for Conversion with following attachments:
1. A solemn declaration of the director of OPC
2. List of members, and list of creditors if any.
3. A copy of No Objection letter from creditors.
4. The latest audited balance sheet on the profit and loss account
When we need to Compulsory Convert of OPC into Private Limited?
As per 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:
1. OPC has paid up share capital that exceeds Rs. 50 lakhs and
2. The yearly turnover of immediately previous three consecutive financial years is more than 2 Crores rupees,
Then it is obligatory for Such company has to compulsorily convert to a and private or public limited company within a period of 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 surpasses 2 Crore rupees.
The conversion is made by just passing a special resolution in the general meeting, to take No objection certificate in written from the creditors, and the other members before the resolution are passed and through filing application for conversion of OPC to Private Limited Company.
Draft documents as required by Law
Collect signed documents
File form MGT-14 with Necessary attachments
File form INC-6 with required attachments after getting approval of form MGT-14 from department
Receive Fresh Certificate of Incorporation from concern department