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 should be discharged by a newly formed Private Limited Company. These rules will not affect the existing debts, liabilities, obligations or contracts of the OPC. There are two ways of converting an OPC into a private limited company either voluntarily or mandatorily.

Two Types of Conversion

 For converting an OPC into Private Limited Company, the provisions laid down in the Section-18 of the Companies Act 2013, and the Companies (Incorporation) Rules of 2014, in particular the Rule 7(4) of the Companies (Incorporation) Rules, 2014, needs to be followed for both the conditions; voluntarily and under compulsion. Voluntary conversion into a private limited company is not permitted unless two years is expired from the date of incorporation of the OPC. Though, if the paid-up share capital exceeds rupees 50 lakhs or if its average turnovers exceed INR 2 crores then within two months, the OPC could convert into a private limited company.The OPC shall alter its memorandum and articles by passing resolutions to give effect to the conversion and to make necessary changes thereto.

Process for conversion is given in Section 18 of Companies Act, 2013 and Rule 7(4) of the Companies (Incorporation) Rules, 2014 which are reproduced for your reference: 

S. No. STEPS ACTION
BOARD MEETING ISSUE NOTICE in accordance with the provisions of section 173(3) of the Companies Act, 2013 and SS-I for convening a meeting of the Board of Directors. Main agenda for this Board meeting would be:
AGENDA :

To discuss with directors that Company want to convert into OPC into Private Limited Company.

Pass Board resolution for increase in No. of Directors. (Minimum 2 Directors)

Pass a board resolution to get in principal approval of Directors for increase shareholder of the Company.

(Minimum 2 Share holders)

Pass Resolution to get shareholders’ approval for Alteration in MOA & AOA of Company.

There is required to pass Shareholder resolution. But as per Section 122(1) there is no need to

hold EGM by OPC, it shall be sufficient if, in case of OPC, the resolution is communicated by  the member of the company and entered into the minutes books required to be maintained u/s

188 and signed and dated by member and such date shall be deemed to be the date of the meeting for all the purpose under this Act.
ROC FORM FILING For conversion of OPC in Company few E-forms will be filed with concerned Registrar of Companies at different stages as per the details given below:
E- Form INC-6 As per Section 18 of CA-2013 OPC within 30 days of passing of Special Resolution file form with ROC.
ATTACHMENTS:

Certified true copy of board resolution where person giving notice has been authorized Altered copy of MOA & AOA.

Copy of the duly attested latest financial statements Certified true copy of Special resolution where person giving notice has been authorized Any   other  information    can    be  provided   as   an optional attachment(s).

Duty of ROC:

Concerned Registrar of Companies (ROC) will check the E-forms and attached documents filed by the Company for Conversion of Private Company into One Person Company (OPC). On being satisfied that Company has complied with prescribed requirements the Registrar shall issue the Certificate to the effect of Conversion of Private Company into One Person Company (OPC).

For converting to a private limited company, OPC is required to have 2 directors and 2 members. As per Rule 6 of The Companies (Incorporation) Rules, 2014:- Conversion of One Person Company to Private Limited Company is mandatorily required under the Companies Act, 2013. Mandatory conversion of One Person Company to Private Limited Company is required in case a One Person Company meets certain parameters

  • Effective date of increase in the paid-up share capital of a One Person Capital beyond rupees fifty lakhs AND
  • Increase of average annual turnover during the period of immediately preceding three consecutive financial years is beyond rupees two

In the above case, the One Person Company shall be mandatorily required to convert itself into either a private or a public company Within a Period of Six Months

DISCLAIMER: THE ARTICLE IS BASED ON THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING AT THE TIME OF THE PREPARATION.IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT AND INDIRECT RESULT FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING INITIATIVE.

THE AUTHOR CAN BE REACHED AT VINAYAK.CHARU@GMAIL.COM AND AT 6283643738

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