Summary: The process of converting a One Person Company (OPC) into a private or public company involves several critical steps as per the Companies Act, 2013, and related rules. The process begins with holding a Board Meeting where resolutions for conversion and alteration of the Memorandum of Association (MOA) and Articles of Association (AOA) are passed. The OPC must then increase its number of directors and members as per legal requirements. After this, the OPC files form INC-6 with the Registrar of Companies (ROC) along with necessary documents, including the altered MOA and AOA, special resolution, and list of members and directors. The ROC, upon satisfying compliance, will issue a certificate of conversion. Post-conversion, the company must arrange a new PAN, update its stationery, bank accounts, and notify relevant authorities about the change in status. These steps ensure a smooth transition from an OPC to a private or public company, complying with the legal framework set by the Ministry of Corporate Affairs (MCA).
SHORT SUMMARY:
As proposed in Budget Speech in 2021 in respect of amendment in provision of One Person Company. MCA has introduced “Companies (Incorporation), Second Amendment Rules, 2021 on 1st February 2021.
Most Important: Amendment in Process of Conversion of One Person Company to Private/ Public Company
- Date of Effectiveness of these rules:
[1]These new processes / rules came into effect on 1 April 2021.
- Applicable Section(s)
Section 3 of companies Act,2013
- Applicable Rule(s)
Rule 6 of companies (Incorporation) Rule, 2014 (as Amended By (2nd Amendments) Rule, 2021
PROCESS OF CONVERSION OF OPC TO OTHER COMPANY:
STEP – 1: Holding of Board Meeting
OPC Shall hold a Meeting of Board of Directors in case there are more than 1 director. In the case of OPC having only one director then the date of noting of resolution in minute book shall be considered as date of Board Meeting. Following resolutions shall be passed in BM:
- Conversion of OPC into other type of Company
- Alteration in MOA & AOA
- Fix date, time and place for holding Extra-ordinary General meeting (EGM) to get approval of shareholders, by way of Special Resolution,
STEP – 2: Alteration on MOA & AOA
OPC Shall alter its Moa & AOA by passing a shareholder resolution to give effect to the conversion.
Que: How to pass shareholder resolution in OPC?
As per Section 122(3), instead of holding of EGM or AGM, it shall be sufficient if, in case of One Person Company, the resolution is communicated by the member to the company and entered in the minutes-book required to be maintained under and signed and dated by the member and such date shall be deemed to be the date of the meeting for all the purposes under this Act.
Company Shall file MGT-14 Within 30 days from the date of passing Special Resolution
Steps of passing of Resolution:
- Noting in Minutes Book
- Sign and date the Minutes
- Extract of Minutes as CTC
STEP – 3: Increase in Number of Member & Directors:
OPC Shall increase the number of members and directors to two or seven and two or three as per the requirements of the Act for such class of Company.
Increase in No. of Director: OPC shall pass board as well as general meeting resolution for appointment of Director. After passing of resolution OPC shall file DIT-12 with ROC.
Increase in No. of Members: OPC shall increase no. of members by allotment of new shares or transfer of existing shares.
STEP – 4: Filing of INC-6:
OPC shall file e-form INC-6 along with the following documents.
- Altered AOA and MOA
- Copy of Special Resolution
- Copy of Notice, Explanatory Statement, Minutes and Attendance sheet of EGM
- List of proposed members and its director along with consent
- List of Creditors; and
- The latest audited balance sheet and profit and loss account.
STEP – 5: Issue of Certificate by ROC:
Once ROC satisfied that requirement of this rule has been complied with, the ROC shall approve the form and issue the certificate.
| POST CONVERSION REQUIREMETNS | |
| 1. | Arrange new PAN No. of the Company |
| 2. | Arrange new stationary with new name of the Company |
| 3. | Update Company bank account details |
| 4. | Intimate all the concerned authorities like Excise and sales tax etc about the status change |
| 5. | Printed copy of new MOA & AOA. |
DRAFT BOARD RESOLUTION
(TO CONSIDER AND APPROVE CONVERSION OF AN OPC INTO PRIVATE OR PUBLIC COMPANY
“RESOLVED THAT pursuant to the provisions of section 3 and any other apli provisions, if any of the Companies Act, 2013, read with rule 6 of Companies (Incorpor Rules, 2014, and subject to the approval of members of the company, the consent fi Board be and is hereby accorded for the conversion of One person Company into a Prin Limited Company/Public Limited Company and consequently the name of the Compa be and is hereby changed from “. .” to “.
RESOLVED FURTHER THAT an Extra ordinary General Meeting of the company be called and held at on…..at……………..as per the draft notice placed before the meeting duly initialed by the Chairperson for identification.
RESOLVED FURTHER THAT Ms./Mr ……(director) of the company be and is hereby authorized to file necessary documents/forms with the Registrar and to do all such acts, deeds, matters and things as may be deemed necessary for the purpose of giving effect to this resolution and for matters connected therewith or incidental thereto
DRAFT SPECIAL RESOLUTION
(FOR CONVERSION OF OPC INTO A PRIVATE OR PUBLIC COMPANY)
“RESOLVED THAT pursuant to the provisions of sections 3, 18 and 122 and any other applicable provisions, if any of the Companies Act, 2013, read with rule 6 of Companies (Incorporation) Rules, 2014, the consent of the members/creditors be and is hereby accorded to the conversion of this One Person Company into a Private Limited Company/ Public Limited Company and consequently the name of the Company be and is hereby changed from “. …..” to “.
RESOLVED FURTHER that Mr…………., Director of the Company be and is hereby authorised on behalf of the Company, to do all such acts, deeds, matters and things as deemed necessary, proper or desirable and to sign and execute all necessary documents, application and returns for the purpose of giving effect to the aforesaid resolution along with filing of necessary e-forms with Registrar of Companies,………. (jurisdiction).”
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Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at [email protected]).
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