Applicable Laws of OPC to Pvt. Ltd. Company
One Person Company (OPC) has some limitations compared to private limited companies. If you plan to convert your OPC to Private Limited Company for better opportunities and facilities, you can apply for the conversion according to the Companies Act, 2013, and the provision of the Companies Incorporation Act, 2014 (Section-18), you can convert your One Person Company to Private Limited Company. The conversion of OPC to a Private Limited company will not affect the existing liabilities and debts, obligations, or contracts with other companies of the existing one-person company. The company will turn into a Private Limited company with all its responsibilities.
An OPC can be converted into a Private Limited company by passing a special resolution in the Board Meeting. The minimum number of directors of the company must be increased to two. The creditors also have to provide an NOC (No Objection Certificate) in a documented form. After following some other rules, an OPC can be converted to a Private Limited Company.
How an OPC Can Be Converted to Pvt. Ltd Company?
There are two distinctive ways through which an OPC can be converted into Private LimitedCompany. They are:
- Voluntary conversion
- Compulsory conversion
Clarification of Voluntary and Compulsory Conversion
- Voluntary conversion
A voluntary conversion to a Private Limited Company is not permitted before the completion of 2 years as One Person Company from the day of incorporation. The next term for voluntary conversion is financial turnover. If the One Person Company’s paid-up share is more than Rs. 50 lakhs or the annual turnover is Rs 2 crores, the company will automatically turn into a voluntary Private Limited Company within 2 months. Once the company fills up the mentioned criteria and converts into a Private Limited Company, The OPC authority needs to inform the ROC (Register of Companies) through the form INC-5 within the next 60 days of voluntary conversion.
Mandatory or Compulsory Conversion
If the circumstances of the OPC are like the following, the authority can convert it to Private Limited Company.
- The paid-up share capital crosses the capital of Rs 50 lakhs
- The average turnover of the last 3 years of consecutive financial years exceeds more than 2 crores.
When these two terms are fulfilled, the company authority can apply for the private limited company conversion in the next 6 months.
Requirement for OPC to Private Limited Conversion
Alteration of MOA and AOA
Alteration of MOA and AOA as per section 122(3) of the Companies Act 2013.
1
Minimum Requirement Compliance
- Directors must be increased to two or more.
- Members must be increased to two or more.
2
Compliance with Section 18
- Application to the ROC.
- Obtaining a New Certificate of Incorporation
- No Impact on existing Obligation.
3
Procedure for conversion of OPC to Pvt. Ltd Company
Approval of Draft Notice of Extra Ordinary General Meeting
Approval of of the MOA and AOA
Authorization of Company Secretary or Director
Date and Time of Extra Ordinary General Meeting must be declared.
Application to the Registrar of Companies
Once all the mentioned processes and steps are completed, you need to file an application to the concerned ROC along with the following documents:
Copy of Special Resolution
The latest audited balance sheet with profit and loss mentioned
Reformed MOA and AOA
Consent of the nominee
List of proposed members, and its directors with consent letters
Proof of identity of the member and nominee
List of creditors
Residential proof of the member and nominee
Copy of NOC of every creditor with the application for conversion
Copy of PAN card of the member and nominee
FAQ
What is OPC to Private Limited Company?
When you want to convert your One Person Company to a Private Limited Company, you need to follow some specific process to comply with the Companies Act 2013 and the rules of 2014. Then, you can avail of the benefit of a Private Limited Company.
Can an OPC voluntarily convert to a Private Limited Company?
Yes, OPC can be voluntarily changed to Private Limited Company. A voluntary conversion to a Private Limited company is not permitted before the completion of 2 years as One Person Company from the day of incorporation. The next term for voluntary conversion is financial turnover. If the One Person Company’s paid-up share is more than Rs. 50 lakhs or the annual turnover is Rs 2 crores, the company will automatically turn into a voluntary Pvt. Ltd Company within 2 months.
What if I do not want to create a Private Limited company from OPC?
If the terms mentioned above are satisfied, your OPC will voluntarily convert to Private Limited Company. Contact us to learn more.