Introduction
One person Company is totally a revolutionized concept brought by the Companies Act, 2013 where a single person can easily form a company of his own enjoying both the benefits of sole ownership as well as corporate identity. Th provisions governing OPC are contained in Section 3 and Section 18 of Companies Act, 2013 read with relevant rules. In this article we will discuss about the complete particulars when an OPC voluntarily converts itself into Private Company and the detailed procedure regarding the same.
Legal Framework in relation to Conversion of OPC into Private Company:
Section 18 of the Companies Act, 2013, Companies (Incorporation) Rules, 2014, and Companies (Incorporation) Second Amendment Rules, 2014 discuss about the Conversion of OPC into a Private Limited. After the coming of Companies (Incorporation) Second Amendment Rules, 2014 amended the following conditions regarding the voluntary conversion of OPC into Private Company
(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 to whichever number it wants which means there was certain boundary lines already drawn for OPC restricting its operations. Now any OPC can continue itself being an OPC even after crossing the abovementioned threshold limits.
Procedure of conversion:
Rule 6 of Companies (Incorporation) Second Amendment Rules, 2021 prescribe the Conversion of One Person Company into Private Limited Company-
(a) Convene Board Meeting for approving the resolution for the voluntary conversion of OPC into Private Limited.
(b) Communicate the resolution to single member and make an entry in the respective minute book and get it passed on the date when signed by single member. The special resolution has to be passed for approving:
i) The voluntary conversion
ii) Amending the alterations in MOA and AOA of the Company.
iii) Increasing the number of Directors.
(d) File DIR-12 with the concerned ROC for increase in the no. of Directors.
(e)File MGT-14 with the Registrar of Companies within 30 days of passing the necessary member resolution.
NOTE: Before filing of MGT-14, please ensure that you have already increased the number of directors to two while converting it into private company
Attachments to MGT-14:
(a)Copy of altered MOA has to be attached (Nominee Clause has to be to omitted, the word OPC has to be omitted from the name clause of Company).
(b) Copy of altered AOA has to be attached (Articles of private company has to be adopted. Remember to include the definition of Private Company as per Section 2(68) in the definition of Company)
(c) Copy of the Special Resolution (Remember no copy as explanatory statement has to be attached in case of OPC as Section 102 not applicable to OPC)
After filing of the MGT-14, E-form INC-6 has to be filed with Registrar of companies within next 30 days of filing of MGT-14. INC-6 has been modified after coming of the amendment rules, 2014.
Attachments to INC-6 are:
(a) Altered MOA and AOA of company as already attached in MGT-14.
(b) Latest financial statements of the company duly signed and attested by statutory Auditor of the Company. (Remember the latest audited financial statements of the previous year has to be attached).
(c) Copy of Board resolution approving the conversion of the company and authorising the sending of notice.
(d) Other attachments shall be as follows:
(i) Affidavit by all the existing directors of the company for the conversion of OPC into private.
(ii) Consent by the nominee for the conversion along with PAN and Aadhar duly attested.
(iii) Board Resolution for approval of transferring the shares to another proposed member(s) along with Share transfer form (SH-4). Note: There will be no change in the subscription clause of MOA.
(iv) List of Member and list of Directors on letterhead of company.
(v) List of Creditors with the amounts outstanding against each of their names in accordance with the financial statements of the company along with Individual NOC received from them regarding the proposed conversion.
(vi) Copy of the Special Resolution.
The Registrar on being satisfied that all the procedural requirements are being complied with shall record the change in its Register and issue the Certificate thereof.
Remember that the existing liabilities, obligations, debts and contracts of OPC will remain unaffected even after the conversion of the company.
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(Author can reached at aayushiagarwal91@gmail.com)
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