CONVERSION OF ONE PERSON COMPANY (OPC) TO PRIVATE LIMITED COMPANY

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. Under both these type of conversions, the requirements are necessary alterations in the MOA and AOA of the OPC (As per the provisions provided in section 18 of the Companies Act, 2013, along with section 122 of the Act). The section says to obtain no objection in written form, from the concerned members and creditors; passing a resolution in support of conversion; and it should also satisfy the requirements of the minimum paid-up capital, along with the minimum number of members and directors. For incorporating a private limited company the minimum paid capital recommended is Rs. 1,00,000 and two members and two directors at a minimum. 

For converting OPC to a private company, OPC is required to have 2 directors and 2 members.
There are two ways of converting One Person Company (OPC) into Private ltd Company. These are as follows:

1. Voluntary Conversion
2. Mandatory Conversion

VOLUNTARY CONVERSION 
Voluntary conversion is not permitted unless two years is expired from the date of incorporation of the OPC. But if the paid up share capital exceeds Rs. 50 Lakhs or its average turnovers exceed Rs. 2 Crores then within 2 months, the OPC could convert into a private ltd company even before expiry of 2 years.

The OPC shall alter its MOA and AOA by passing resolutions to give effect to the conversion.

Procedure for conversion of One Person Company (OPC) into Private Company:

1. Issue notice according to the provisions of section 173(3) of the companies Act, 2013 and SS-I for holding a meeting of the Board of Directors.     
     a. To discuss whether Company want to convert the OPC into private ltd company
     b. To pass Board resolution for increase in number of Directors (minimum 2 directors) and for increase in           shareholder of the Company (minimum 2 shareholders).
     c. To pass a resolution to get shareholder’s approval in MOA & AOA of Company.
2. Hold a shareholder’s meeting to pass shareholder resolution.
3. According to section 18 of Companies Act 2013, the OPC should file E-form INC-6 with ROC within 30 days of passing special resolution
4. OPC should attach the following:
     a. Certified true copy of board resolution where person giving notice has been authorized.
     b. Altered copy of MOA and AOA.
     c. Copy of duly attested latest financial statements.
     d. Certified true copy of special resolution where person giving notice has been authorized.
     e. Any other information can be provided as an optional attachment.

On being satisfied that company has complied all the requirements the ROC shall issue the Certificate to the effect of conversion.

MANDATORY CONVERSION
An OPC is mandatorily converted into private limited company in following cases:

1. If Paid up share capital of a One Person Company exceeds Rs. 50 Lakhs and
2. Average annual turnover during the period of immediately preceding 3 consecutive financial years exceeds 

In the above case, OPC shall be mandatorily converted into private limited company or a public company within a period of six months.

Procedure for mandatory conversion:
1. Issue notice according to the provisions of section 173(3) of the companies Act, 2013 and SS-I for holding a meeting of the Board of Directors.
   a. To discuss with directors that Company has crossed the Limits as given above and there is need to                   mandatory conversion of OPC into Company.
   b. To pass Board resolution for increase in number of Directors (minimum 2 directors) and for increase in           shareholder of the Company (minimum 2 shareholders).
    c. To pass a resolution to get shareholder’s approval in MOA & AOA of Company.
2. Hold a shareholder’s meeting to pass shareholder resolution.
3. OPC is required to file E-Form INC -5 within 60 days from the period when condition as mentioned above attract informing that it has ceased to be OPC and that it is now required to convert itself into a private or public company.

OPC is required to attach the following:

a. Certified true copy of board resolution where person giving notice has been authorized.
b. Copy of duly attested latest financial statements.
c. Certificate from CA in practice for calculation of average turnover during the relevant period- this certificate is mandatory to attach if the threshold limit is exceeded on account of average annual turnover.
d. Any other information can be provided as an optional attachment.

According to section 18 of Companies Act 2013, the OPC should file E-form INC-6 with ROC within 30 days of passing special resolution.

OPC should attach the following:

a. Certified true copy of board resolution where person giving notice has been authorized.
b. Altered copy of MOA and AOA.
c. Copy of duly attested latest financial statements.
d. Certified true copy of special resolution where person giving notice has been authorized.
e. Any other information can be provided as an optional attachment.

On being satisfied that company has complied all the requirements the ROC shall issue the Certificate to the effect of conversion.