Convert OPC into Private Limited Company

Convert OPC into Private Limited Company


A One Person Company (OPC) can be lawfully converted into a Private Limited Company either voluntarily or compulsorily. The conversion of One Person Company (OPC) into a Private Limited Company shall not affect the existing debts, liabilities, obligations or contracts of the OPC and will inevitably discharged by the newly formed Private Limited Company.

The conversion of One Person Company (OPC) into a Private Limited Company under both situations requires the MOA and AOA of the OPC to be altered by passing the required resolution and satisfy the required minimum paid-up share capital and minimum number of required members and directors.

Why does One Person Company need to convert into a private limited company?

To get the various features of a company, a lot of OPCs decide converting themselves into a Private Limited Company.

The policy behind launching the idea of One Person Company includes encouraging small businesses. According to Company Act 2013, there is a need of conversion of One Person Company into private limited company when it produces certain criteria like :

If the paid-up share capital of the One Person Company exceeds Rs. 50 lakhs.

In the case, annual turnover exceeds Rs. 2 cores consecutively for last 3 consecutive years.

The maximum time limit for the conversion of the OPC that meets the above-mentioned criteria is 6 months.

Converting an OPC Company into Private Limited Company

2 types of conversion are there :

Voluntary Conversion

According to voluntary conversion method :

The condition is that the OPC cannot be converted into a private limited company until the end of 2 years from the date of incorporation as an OPC.

An application should be filed in Form INC-6.

The number of shareholders and directors must be enhanced to the essential limit.

Compulsory Conversion

Under compulsory conversion method :

The OPC company must be converted mandatory if its paid up capital becomes more than Rs 50 lakhs and average annual turnover of preceding 3 years crosses Rs 2 crores

Notice of conversion in Form INC-5

Application should be filed in Form INC -6

The number of shareholders and directors should be increased to the requisite limit.


Procedure For Conversion Of One Person Company Into Private Limited Company




1


BOARD MEETING

The sole director of One Person Company shall pass a resolution for intimating to Registrar about the conversion and also issue notice for holding a general meeting.



2


INC-5

Company shall file a notice for conversion with the Registrar in EĀ·FORM INC-5 along with relevant documents.

3


GENERAL MEETING

The One Person company shall hold a general meeting and pass a special resolution for Alteration of Memorandum and Articles of Association to give effect for such conversion

4


MGT-14

The OPC shall file copy of the special resolution passed at the general meeting with the Registrar of Companies within thirty days from the date of passing such resolution in E-form MGT-14.

5


CERTIFICATE OF INCORPORATION



































   
        Step 1 - Notice is to be given to Directors with the agenda and notes to arrange the Board Meeting minimum 7 days before the date of the meeting in compliance with the Secretarial Standards I to deem the conversion.

Step 2 - Board Meeting should be arranged for the following :

Decision regarding day, date, time, and place to arrange extra ordinary general meeting ("EOGM")

Approval of draft notice for arranging Extra Ordinary General Meeting

Approving the preparation of memorandum of association

Approval to make articles of association

Vesting power in order to make sure the compliance

Step 3 - The resolution shall be informed to the member and recorded in the minute book and signed and dated by the member and such date shall be considered to be the date of the meeting for all the reasons along with Section 122 of the Act.

Step 4 - Filing should be done in Form MGT-14 within a time of 30 days since passing the resolution.

Attachments :

CTC of signed and dated minutes

CTC of Board Resolution authorization offering the notice

Changed memorandum and articles of association of the Company

Step 5 - Filing of Form INC-5 should be done within 60 days since passing the resolution intimating the Registrar. It should be noted that this form needs to be filed only in the case of mandatory conversion.

Attachments :

CTC of Board Resolution approval offering notice

CTC of signed and dated minutes

Photocopy of most up-to-date financial statement properly attested

Step 6 - Filing of Form INC-6 within :

6 months of compulsory conversion

30 days of voluntarily conversion

Attachments :

CTC of Board Resolution approval offering notice

Changed memorandum and articles of association of the Company

CTC of signed and dated minutes

Photocopy of properly attested most up-to-date financial statement


Important features

The One Person Company can be converted into private limited Company as it may appear suitable after compliance to the minimum number of Directors and member requisite.

Once e-Form MGT-14 is approved, e-Form INC-5 must be filed.

In the case of compulsory conversion, Form INC-6 must be filed within 6 months of issuing the resolution. In the case of voluntary conversion, it must be filed within 30 days of passing the resolution.

Section 18, Companies Act 2013

Section 18 of the Companies Act, 2013 includes the process to convert already registered companies. Following points are stated in this :

By modifying its memorandum and articles of association, the company can be converted on its own.

Depending on the application, the Registrar of companies can issue a fresh certificate of incorporation

The debts, liabilities, contracts or obligations entered by the company previously should not be affected by the new registration

Companies (Incorporation) Rules, 2014 should be followed also

Documents needed for the conversion of OPC to Pvt Ltd Company

Identity Proof - Voter ID/ Driving License/ Passport of Shareholders and Directors

PAN Card - PAN Card of shareholders and Directors. Foreign nationals require providing a passport.

Address Proof - Electricity Bill/Telephone Bill/ most recent Bank Account Statement of Shareholders and Directors

Photograph - Most recent Passport size photograph of Shareholders and Directors

Financial Statements - Properly certified photocopy of most up-to-date and audited financial statements

NRI - In the case of NRI or Foreign National, documents of partner should be notarized or apostilled

   Incorporation documents of the OPC - Certificate of Incorporation, Memorandum of Association and Article of Association must be offered.



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