Practical Aspects for Conversion of OPC (One Person Company) into Private Limited Company

Practical Aspects for Conversion OPC (One Person Company) into Private Limited Company

To doing business or start business with the tag of OPC is now very common these days due to less compliance and easy to establish but when the business start grows, company want to expand its identity with more effective and legally term. Now the OPC company has an option under companies act 2013 to move forward for convert itself, voluntary into Private Limited/Limited.

Here we are discussing the provision of conversion OPC into Private Limited Company under companies act 2013.

Section Attracts: Section 18 of the Companies Act, 2013 and the Rule there under Rule 6 Companies (Incorporation) Rules, 2014

Legal Framework: After the notification coming of Companies (Incorporation) Second Amendment Rules, 2014 amended the following conditions regarding the voluntary conversion of OPC into Private Company (Notification Dated 01^st Feb 2021)

(a) Ministry has waived off the condition of completing mandatory two years lean-on period for any OPC to convert itself into any other kind of company except Section-8 company. Now any OPC after April, 2021 can convert itself into any other form irrespective of its incorporation date.

(b) Also, earlier any OPC when it’s paid-up capital or turnover reaches 50 lacs rupees or 2 crore rupees respectively has to mandatorily convert itself into any other form after increasing the no. of members and directors, is that there were certain boundary lines drawn for OPC restricting its operations. After the Notification now any OPC can continue itself being an OPC even after crossing the abovementioned threshold limits.

Processor for Conversion

Step 1: Issue notice of board resolution with the following matters:

• Change in Name clause in the MOA of Company.
• Alteration of Articles of Association of the Company
• Conversion of OPC into Private Company and Change of Name of company (OPC to Private Limited)
• Appointment of Additional Director to meet the minimum director requirement of Companies Act 2013.
• You may consider share transfer to new member form existing member so that the criteria for Minimum number of members can be meet.

Note: There will be no change in the subscription clause of MOA.

• Approval of Draft notice for calling Extra ordinary General meeting

Reminder Point: Fill form DIR 12 to increase the number of directors as required, minimum two in case of private limited company.

Step-2: File MGT-14 along the attachments within 30 days from the pass of the special resolution by the presence of signal member in writing the minutes and get it passed on the date when signed by single member

Here the attachments

• Altered AOA
• Altered MOA
• Board Resolution
• Minutes Copy of Members resolution
• EGM notice with explanatory statement

Step 3: Filling of Form INC-6 once the above steps are completed and MGT-14 has been approved, the company needs to file an application (e-Form INC-6) to the concerned ROC along with the following documents:

• Altered MOA and AOA
• Copy of Board Resolution
• Copy of Special Resolution
• The list of proposed members and its directors along with consent
• Minutes of the Extra Ordinary Meeting
• The latest audited balance sheet and profit and loss account.
• Copy of NOC of every creditor with the application for conversion
• Consent of the nominee
• Affidavit by all the existing directors of the company for the conversion of OPC into Private Limited.
• Copy of PAN card of the nominee and member
• Proof of identity of the nominee and member
• Residential proof of the nominee and member

After approval of this INC-6 to the respective ROC, the new COI will be generated and company master data is also changed.

Remember that the existing liabilities, obligations, debts and contracts of OPC will remain unaffected even after the conversion of the company.

Post Compliances after conversion

New Certificate of Incorporation [Section 13(3) of the Companies Act, 2013 and Rule 29(2) of Companies (Incorporation) Rules, 2014. On approval of Form MGT-14 and Form INC-6, the Registrar will issue a fresh Certificate of Incorporation with the Changed name to the applicant company in Form INC-25.

Post Conversion Compliances:

1. Every Alteration made in the memorandum of the company shall be noted in every copy of the memorandum or articles as the case may be [Section 15(1) of the Companies Act, 2013]

2. Every Company shall:

• Print the new Altered MoA & AoA with the new Certificate of Incorporation
• Paint or affix its name and address of its registered office outside every of its place of business and in legible letters [Section 12(3)(a) of the Companies Act, 2013]
• Have its name engraved in legible characters on its seal, if any [Section 12(3)(b) of the Companies Act, 2013]
• Get its name, address of its registered office, and Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers, notices, and other official publications [Section 12(3)(c) of the Companies Act, 2013] It is to be noted that the former name of the company shall be printed and affixed as the case may be for a period of two years from the date of conversion.
• Have its name printed on hundis, promissory notes, bills of exchange, and such other documents [Section 12 (3) (d) of the Companies Act, 2013]
• To apply for a new Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
• Send the new converted name letter to all the Banks, authorities, and other Basic Utility Service providers as applicable.
• To arrange for new rubber stamps in the new name of the Company.
• Share Certificate

3. File Necessary Amendment Application under the following Acts:

• Goods and Services Act
• Shops & Establishment Act
• Factories Act
• Employees Provident Fund Organization
• Employees State Insurance Corporation
• Other Labour Laws
• Industry-Specific Laws.

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Disclaimer: The entire contents of this article have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. The observations of the author are personal view and the authors do not take responsibility of the same and this cannot be quoted before any authority without the written.