CONVERSION OF ONE PERSON COMPANY (OPC) INTO A PRIVATE LIMITED COMPANY(PLC)

An OPC can be converted into a Private Limited Company voluntary if it meets the criteria mentioned below:

• A One Person Company (opc) can get itself converted into a Private Limited Company(plc) after two years from the incorporation, by increasing the minimum number of directors to two or more or minimum of seven members.

Mandatory conversion is essential in case a One Person Company meets the parameters mentioned below:

• If the paid-up share capital of an OPC is exceeds Rs. Fifty lakhs,

• If the average annual turnover is exceeds Rs. 2 crores preceding three consecutive financial years, the one person company (OPC) is required to convert itself within six months of the date as mention in the provision of section 18 of the Companies Act, 2013.

• The one person company (OPC) need to alter its Memorandum of Association and Articles of Association by passing a special resolution to reflect the necessary changes after conversion

• A NOC is needed from the creditors and the other members before the resolution is passed.

1. The directors of the company should be given a declaration by an affidavit that confirms that all the members and directors have provided their consent for the conversion.

2. The list of members and the creditors

3. The current financial year’s audited Balance sheets and the profit and loss accounts

4. A copy of the NOC of secured creditors

If One Person Company does not take steps for conversion when it is mandatorily required within the specified time, the One Person Company or any member of the One Person Company shall be punishable with a fine of rupees five thousand and with a further fine which may increase to rupees five hundred for every day after the first day during which such fault continues.

The applicant has to follow the below mention steps to convert its one person company into a private limited company:

1. Intimation of Registrar of Companies

   The concerned Registrar of Companies must first be intimated through the prescribed method that the One Person Company is now required to convert itself into a private limited company or a limited company by integrity of its paid-up share capital or average annual turnover, having exceeded the threshold limit.

2. Passing of Board Resolutions

   The shareholders of the One Person Company should hold a General Meeting and pass the required resolution for increasing the paid-up capital, number of shareholders, and appointment of the director (minimum 2 number of directors) to meet the requirements of a Private Limited Company or Limited Company. For conversion of, it is to be ensured that there are at least two shareholders, two directors and paid-up share capital of rupees five lakhs.
   In addition to the above, a board resolution must also be passed by the shareholders to approve alteration of the Memorandum of Association and Articles of Association of the OPC to confirm with the requirement of a Private Limited Company or Limited Company.

3. Application for conversion

   Once the above formalities are done, the One Person Company can make an application in the prescribed format in E-Form INC-6 to the Registrar of Companies within the 30 days of passing the resolution for the conversion. The company has to file a Special Resolution passed by the shareholders for Conversion of Private Company into OPC with the concerned Registrar of Companies. Hence, file form MGT-14 within 30 days of the passing of Special Resolution with the concerned Registrar of Companies. The Registrar has to verify and approve the application and the attached documents, the Registrar would issue a fresh certificate of incorporation and then converting the one person company into a private limited company or limited company. The new registration will not affect the debts, liabilities, obligations or contracts entered into previously by the company. The form INC-6 should contain the following attachments in it:

   • Certified true copy of board resolution where giving notice has been authorized

   • Altered copy of MOA & AOA

   • Copy of the duly attested latest financial statements

   • Certified true copy of Special resolution where giving notice has been authorized

   • Any other information of the company can be provided as an optional attachment(s).