Conversion of One Person Company to Private Company

Conversion of One Person Company to Private Company

Q.1 Can OPC be converted into private limited company?

A.1 OPC can be converted in to Private Limited after two years of setup, or even before that if its turnover is more than Rs 2 crore and paid share capital surpasses Rs 50 lakhs in a financial year,

Q2. Can OPC be converted into Section 8 company?

A.2 OPC cannot be incorporated or converted into a company under section 8 of the Act. OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any other body corporate

Q.3 Can OPC have 2 directors?

A.3.  new concept has been introduced in the Company’s Act 2013, about the One Person Company (OPC). In a Private Company, a minimum of 2 Directors and Members are required whereas in a Public Company, a minimum of 3 Directors and a minimum of 7 members. A single person could not incorporate a Company previously.

The legal provisions governing the Conversion of Private Company into OPC are as follows:

• Section 18 of the Companies Act, 2013
• Rule 7 of the Companies (Incorporation) Rules, 2014.

The following are the conditions for Conversion of Private Company into OPC:

• The paid-up share capital of Company is less than 50 lakh Rupees.
• In the past 3 consecutive years, the annual turnover of the Company should not be less than 2 crores Rupees.
• The Shareholder of the new OPC should have Indian nationality.
• The Shareholder of the new OPC should be a resident person of India. A person becomes resident if he/she stays in India for a period of 180 days of one calendar year.
• The Shareholder should not be holding any other OPC, or he/she should not be a member of any other OPC.
• A minor cannot be a part or member of OPC.

The procedure followed for the Conversion of Private Company into OPC is as follows:

Form Filing to RoC

For the purpose of Conversion of Private Company into One Person Company (OPC), certain e-Forms are to be filed with the concerned Registrar of Companies (RoC). The forms to be filed with the concerned Registrar are as follows:

Form MGT-14

After passing of the Special Resolution in EGM, Form MGT-14 should be filed with the RoC. The Form MGT-14 should be filed with RoC within 30 days of passing of the Special Resolution. The following attachments should be made with the Form MGT-14:

• The notice of EGM with the copy of the explanatory statement.
• A true certified copy of the Special Resolution.
• The Altered Memorandum of Association (MoA) and Articles of Association (AoA) of the Company.
• A true certified copy of the Board Resolution.

Form INC-6

The application for the Conversion of Private Company into OPC should be filed to the RoC. The application should be filed in Form INC-6 with the following attachments:

• The total list of members and creditors
• The latest balance sheet of the Company
• The copy of No Objection Letter
• An affidavit of the declaration of the Directors of Company that all the creditors and shareholders have given consent for the Conversion of Private Company into OPC, the paid-up capital of the Company is 50 lakh rupees or less, and the turnover of the Private Company is less than 2 crore rupees.

Issue of Share Certificate

Once the Registrar of Companies (RoC) is satisfied that the Private Company has complied with the prescribed requirements, should Issue of Share Certificate for the Conversion of Private Company into OPC.