How to Convert an OPC into Private Limited

Relevant Section: Section 18 of the Companies Act, 2013 Relevant Rule: Rule 7(4) Companies (Incorporation) Rules, 2014

Note*- These conversions shall not affect the existing debt, Liabilities,  Contracts, or Obligations of the OPC.

Two ways of Conversion

(a) Voluntary Conversion

(b) Mandatory/Compulsory Conversion

Voluntary Conversion

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.

OPC has to communicate voluntary conversion to a registrar of companies in form INC 5 within sixty days.

For converting to a private limited company, OPC is required to have  2 directors and 2 members.

Mandatory/Compulsory Conversion

This is a condition where you need to convert an OPC to private limited company compulsorily.

It is because an OPC has-

(a) paid up share capital that exceeds Rs. 50 lakhs and

(b) the yearly turnover of immediately previous three consecutive financial years is more than 2 Crores rupees,

then it is obligatory for anyone to convert. Such company has to compulsorily convert to a private or public limited company within a period of 6 months from the date when-

(a) the paid-up share capital exceeded 50 lakhs rupees or

(b) 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. It is checked for a No objection certificate in written from the creditors, and the other members before the resolution are passed.

1. Passing the Special Resolution

The shareholders of the OPC should hold a General Meeting for passing the resolution for raising the paid-up capital (if needed), no. of shareholders, and appointment of directors for meeting the requirements of the Private Limited Company.

For converting an OPC to a Private Limited Company, there should be at least 2 shareholders and 2 directors.

2. Intimating to ROC

The concerned ROC should first be communicated through the prescribed method that the OPC is now required for converting itself into a private limited company.

The one-person company shall file copy of the special resolution with the Registrar of Companies within thirty days from the date of passing such resolution in Form No. MGT.14.

3.Application for conversion of OPC to Private Limited Company

The company shall file an application in Form No. INC. 6 within:

√ 6 months of mandatory conversion

√ 30 days of voluntarily conversion

for its conversion into One Person Company along with fees as provided in in the Companies (Registration offices and fees) Rules, 2014, by attaching the following documents, namely: –

(i) The directors of the company shall give a declaration by way of affidavit duly sworn in confirming that all members and creditors of the company have given their consent for conversion, the paid-up share capital company is fifty lakhs rupees or less or average annual turnover is less than two crores rupees, as the case may be;

(ii) the list of members and list of creditors;

iii) the latest Audited Balance Sheet and the Profit and Loss Account; and

(iv) the copy of No Objection letter of secured creditors.

ROC Fees Structure (in case the capital is Rs. 50 Lakhs)

S. No. Particulars Amount (in Rs.)
1. MGT-14 500
2. INC-5 500
3. INC-6 500
Total 1500*

Note*- ROC Fees varies in accordance with the Authorized capital of the Company.

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November 2020