Conversion of One Person Company to Private Limited Company

A One Person Company converts itself into a Private Limited Company under two situations:

1. Voluntary conversion of OPC to Private Limited.

2. Compulsory Conversion of OPC to Private Limited.

Voluntary Conversion of One Person Company to Private Limited Company

  • When a One Person Company gets incorporated, it cannot convert itself to Private or Public company for a period of not less than two years from the date of incorporation.
  • If the time period has elapsed and two years’ time period is over, a One Person Company can apply for converting itself to Private Limited Company or Public limited company.
  • The Conversion process should be done as per the rules and regulations laid down by the Companies Act, 2013 under Section 18, and Rule 7(4) of the Companies (Incorporation) Rules, 2014.

Section 18 of the Companies Act, 2013:

  • A company of any class registered under this Act may convert itself as a company of other class under this Act by alteration of memorandum and articles of the company in accordance with the provisions of this Chapter.
  • Where the conversion is required to be done under this section, the Registrar shall on an application made by the company, after satisfying himself that the provisions of this Chapter applicable for registration of companies have been complied with, close the former registration of the company and after registering the documents referred to in sub-section (1), issue a certificate of incorporation in the same manner as its first registration.
  • The registration of a company under this section shall not affect any debts, liabilities, obligations or contracts incurred or entered into, by or on behalf of the company before conversion and such debts, liabilities, obligations and contracts may be enforced in the manner as if such registration had not been done.

Rule 7:

  • A private company other than a company registered under section 8 of the Act having paid up share capital of rupees 50 lakhs or less or average annual turnover during the relevant period is rupees 2 crore or less may convert itself into OPC by passing a special resolution in the general meeting.
  • Before passing such resolution, company shall obtain No objection in writing from members and creditors.
  • 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.
  • Company shall file an application in Form No.INC-6 for its conversion into OPC along with fees as provided in Companies (Registration offices and fees) Rules, 2014, by attaching the following documents:-

    1. Directors of the company shall give a declaration by way of affidavit duly sworn in conforming that all members and creditors of the company have given their consent for conversion, the paid up capital company is rupees 50 lakhs or less or turnover is less than rupees 2 crores as the case may be,

    2. List of members and list of creditors,

    3. Latest Audited Balance Sheet on the Profit and Loss Account and

    4. Copy of No Objection letter of secured creditors.

Compulsory Conversion of OPC to Private Limited Company:

  • When a One Person Company has a paid-up capital more or equal to Rs. 50 lakhs or the Annual turnover for the relevant financial year exceeds Rs. 2 crore, then in such conditions, the company has to compulsorily convert itself into Private Limited Company or Public Limited Company as per the Rule 7(4) of the Companies (Incorporation) Rules, 2014.