Do you want to convert your one-person company to a private limited company? This article addresses the conversion of an OPC to a private limited company, the benefits of converting an OPC to a private limited company, and other topics related to the conversion of an OPC to a private limited company.
A one-person company (OPC) can be converted into a private limited company (PLC) as per Section 18 of the Companies Act, 2013 (‘Act’) and the provisions of Companies (Incorporation) Rules of 2014 (‘Rules’). The conversion of OPC into a private limited company will not affect the existing debts, liabilities, obligations, or contracts of the OPC. Learn if OPC be Converted into Private Limited Company.
The requirements that are necessary for the conversion of OPC are alterations in the Memorandum of Association (MOA) and Articles of Association (AOA) of the OPC (As per the provisions provided in Section 18 of the Companies Act, 2013, along with Section 122 of the Act).
A minimum of two members and two directors are required to form a private limited company. To convert an OPC to a private limited company, fill out the INC-6 form and submit it to the Ministry of Corporate Affairs, Government of India.
Types of Conversion of OPC Into Private Limited Company
To know about OPC be Converted into a Private Limited Company, and get to know about the types of conversions.
Voluntary Conversion
When an OPC is incorporated, the conversion cannot happen before two years. The procedure of voluntary conversion of an OPC into a private limited company falls under Section 18 of the Companies Act. The company can convert into another company coming under the same Act by the modification of the memorandum of the association and articles of the association in accordance with the provisions.
An application has to be made by the company to register along with the relevant documents which are essential for the conversion. On submission of all relevant documents, the registrar has the power to issue a certificate of incorporation.
The registration of the company under this Act will not affect any liabilities, debts, or obligations before and after the conversion. After the conversion is done, it is obligatory for a private limited company to have a paid-up share capital of ₹50 lakh and also an annual turnover should not be less than ₹2 crores, failing which, it can convert back to an OPC bypassing of a special resolution. You Can Know the OPC Registration Process Online With Help of Our Experts!
Compulsory Conversion
When an OPC has paid-up share capital that exceeds ₹50 lakhs and the annual turnover is above ₹2 crores, then it is obligatory for them to convert into a private limited company. During the conversion, the members have to just pass a special resolution in the general meeting.
Before the resolution is passed, a No Objection Certificate has to be taken in writing from the creditors, and the other members. Within 15 days of the passing of the resolution, the company needs to file an application to the registrar along with a copy of the resolution.
After the application is filled out and the fee paid, the registrar then makes a decision after studying the documents and issues the certificate of conversion.
Process of Conversion of OPC
OPC be Converted into a Pvt Ltd Company, the following conditions must be satisfied:
Intimation to ROC
The Registrar of Companies (ROC) should first be communicated through the prescribed method that the OPC is now required for converting itself into a private limited company.
Passing the Board Resolutions
The OPC should organize a general meeting to pass a resolution appointing directors and members to meet the private limited company’s standards. At least two members and two directors are required to convert an OPC to a private limited company.
A board resolution for OPC be Converted into Private Limited Company should also be passed to approve changes to the OPC’s Memorandum of Association (MOA) and Articles of Association (AOA).
Application for Conversion of OPC to Private Limited Company
After completing the preceding stages, the company must submit an application (e-Form INC-6) to the ROC, along with the required documents for OPC be Converted into Private Limited Company
- Altered MOA and AOA
- Copy of special resolution
- The list of proposed members and its directors along with consent
- List of creditors
- The latest audited balance sheet and profit and loss account.
- Copy of NOC of every creditor with the application for conversion
- Consent of the nominee
- Copy of PAN card of the nominee and member
- Proof of identity of the nominee and member
- Residential proof of the nominee and member.
The ROC verifies that the application information is correct and that the registration fees have been paid. The ROC then takes a decision after thoroughly reviewing the application and supporting documents, and issues the certificate of conversion.
A one-person company was formed in the legal system to encourage entrepreneurs to enter the corporate sector. It will not only allow individuals to contribute to economic growth, but it will also create job prospects.
The removal of the minimum capital and turnover thresholds allows the OPC to obtain international investments without conversion restrictions. It allows OPC to convert voluntarily rather than mandatorily after capital requirements are met.
From the above, you would have understood the requirements to convert a one-person company to a private limited company. Basically, you should know that for a voluntary conversion, you need to wait for a couple of years from the Company Registration Online Process. After the conversion, it can still be converted to an OPC on a special resolution.
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