One Person Company can get itself converted into Private Limited Company by virtue of section 18 of The Companies Act 2013. An OPC can only be converted after 2 years of its incorporation, this conversion does not affect existing obligations or contracts or debts or liability of the OPC instead this conversion opens new opportunities and helps in raising more funds.
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.
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Documents required for conversion
- Digital Signature Certificates (DSC) of all Directors (if already have).
- Director Identification Number (DIN) of all Directors (if already have).
- PAN card and Aadhar card of all Directors.
- In case of NRI or Foreign National, documents of director(s) must be notarized or apostilled.
- Passport size photographs of all Directors.
- Proof of business address (Electricity bill and Registry papers / Rent deed / NOC)
- Certified copy of the latest financial statements.
- Copy of the latest Income Tax Return Acknowledgement
Two Types of Conversion
For converting an OPC into Private Limited Company, the provisions laid down in the Section-18 of the Indian Companies Act of 2013, and the Companies (Incorporation) Rules of 2014, in particular the Rule 7(4) of the Companies (Incorporation) Rules, 2014, needs to be followed for both the conditions; voluntarily and under compulsion.
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 paid up share capital that exceeds Rs. 50 lakhs and 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 the paid-up share capital exceeded 50 lakhs rupees or the last date of the related period in which the average annual turnover surpasses 2 Crore rupees
Process for conversion of OPC to PVT LTD Company
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