How to convert a private company into opc (one person company)

An already registered private company can be converted into OPC (One Person Company) pursuant to section 18 the Companies Act 2013. However, before conversion check for the following conditions stipulated under the Act and the rules:

1. That the paid-up capital of the company to be converted to OPC should be less than Rs. 50 Lacs.
2. That the annual turnover of the company to be converted to OPC must be less than Rs. 2 crores during the past three consecutive financial years.

Note in case the company has not completed its tenure of 3 years then, then the turnover shall be reckoned from the date of its incorporation.

1. The new OPC to be formed must have only one Natural Individual having Indian nationality as a shareholder
2. The shareholder of the OPC to be formed must be a resident person.

Note that a person is treated to be resident if the stay of such person in India during immediately preceding one calendar year is more than 180 days.

1. The shareholder of the new OPC to be formed must not have already incorporated any other OPC, or he should not be the nominee of any other OPC.
2. A minor is not allowed to be a member or nominee of an OPC.

What will happen to the private company’s liabilities, contractual obligations after its conversion to OPC?

The liabilities and contractual obligations entered, by the company before conversion & such debts, liabilities, obligations shall remain unaffected and shall be enforceable in law as if no such conversion has taken place. The OPC formed after conversion shall be liable for them.

The procedure of conversion of Private Company to OPC

In brief:

1. Convene a Board meeting
2. Serve notice to conduct EGM
3. Obtain NOC from the creditors
4. Conduct EGM and pass a special resolution
5. Submit from MGT-14 to ROC
6. Fill form INC-6 for conversion of the Private company to OPC

Details ob above steps:

1. Board meeting: A board meeting is required to be conducted in order to fix a date for calling the meeting of the shareholders (Extra Ordinary General Meeting). Notice to be served to the shareholders shall also be drafted along with the draft resolution. This resolution pertains to the special resolution to be adopted by the shareholder concerning the conversion of private limited to OPC in the general meeting.
2. The notice shall be served in accordance with the provisions of Section 101 of the Companies Act, 2013 all Members, Directors and the Auditors along with explanatory statement as well as the agenda, draft resolution to be passed as a special resolution.
3. Obtain NOC from the creditors: The consent of all the creditors in the form of a No Objection Certificate should be obtained. Such consent obtained from creditors is to be placed before the EGM.
4. Conduct the EGM: In accordance with the date decided in the Board meeting and notice served to conduct the EGM on the designated date, time and place. A special resolution is required to be passed at the EGM concerning the conversion & also the approval of altered MOA & AOA (Memorandum of association and Article of association).
5. Filing of Resolution with the ROC: The special resolution passed at the EGM by the members must be filed with the ROC in Form No MGT-14, within 30 days from its date of passing along with prescribed attachments. Once the MGT-14 is approved, the ROC takes the resolution on its record.
6. Filing of Application of Conversion: Once MGT-14 is approved file the application for conversion through Form – INC-6 with following attachments

Filing of form INC-6:

The form for conversion of a private company to OPC shall be downloaded from the MCA site and to be filled and uploaded at the portal of MCA through CS or such authorized person of the company.

The attachments of the form INC-6 are as given below:

a. No objection certificate / Consent letter obtained from all the creditors.

b. List of all the members and directors of the company

c. The latest audited profit and loss account and balance sheet of the company

d. A declaration in the form of an affidavit to be given for the consent to conversion of company into an OPC, as well as about the paid-up capital of the company is less than 50 lacs and that the turnover is less than two crores to be obtained from all the directors that all members and creditors of the company.

e. Affidavits from the members giving consent about the fact that the paid-up capital being less than 50 Lacs and the average turnover are less than two crores in the past three consecutive financial years.

f. A certificate from a practicing Chartered Accountant to confirm the fact about the company that the paid-up capital of the company is less than 50 lac and that the turnover is less than two crores.

g. The new altered copy of Memorandum of association and article of association for OPC. Note that the new MOA and AOA should include the applicable clauses pursuant to companies act 2013 applicable to OPC should be inserted.

h. Certified true copy of Board Resolution and the special resolution passed at the EGM, and the notices, agenda and explanatory statement for same should also be attached.

Certificate of Conversion:

Once the application for conversion is received by the competent Registrar of Companies, the ROC shall scrutinize the application and on finding it proper in line with the requirements pursuant to Companies Act 2013, the Roc shall approve the form and issues a certificate of converted Private Limited Company into One Person Company.

Source by:

https://medium.com/@enterslice6987/how-to-convert-a-private-company-into-opc-one-person-company-73dc8b8caba8

Enterslice is the Asia's Top 100 Award Winning CA/CPA and Legal Technology Company. The firm is specializing in Busines registration, Fintech Licenses, SEC Matters, CFO & Risk assurances services in the USA, India, China, Middle East & Europe.