What is OPC Company?
One-person company is a completely new idea introduced by the Companies Act, of 2013, in which a single individual may simply start his or her own company and enjoy the benefits of both sole ownership and corporate identity.
The provisions that control the One person company (OPC) have comprised in section 3 and section 18 of the companies act 2013 read with the related regulations. The full details of an OPC’s voluntary conversion to a private limited company, as well as the specific steps involved, will be covered in this article.
Statute Framework About Conversion of OPC into a Private Limited Company:
Section 18 of the Companies Act, 2013, Companies (Incorporation) Rules, 2014, and Companies (Incorporation) Second Amendment Rules, 2014 concern the Conversion of OPC into a Private Limited. Post the coming of Companies (Incorporation) Second Amendment Rules, 2014 revised the following prerequisites for the voluntary conversion of OPC into a Private Company.
- The Ministry has removed the requirement for any OPC to complete the necessary two-year lean-on period before converting to any other type of company other than a Section-8 corporation. After April 2021, any OPC could transform itself into any additional form whatever its incorporation date.
- Additionally, in the past, any OPC that had a paid-up capital or turnover of 50 lac rupees or 2 crore rupees, respectively, was required to convert into another form after increasing the number of members and directors to whatever number it desired, indicating that there had already been established boundaries for OPC that limited its ability to operate. Any OPC can now continue to exist even after exceeding the aforementioned threshold restrictions.
Conversion Process of OPC into a Private Limited Company
Rule 6 of Companies (Incorporation) Second Amendment Rules, 2021 defines the Conversion of One Person’s Company (OPC) into a Private Limited Company-
- Call a board meeting to vote on the motion converting OPC voluntarily into a private limited company.
- Convey the resolution to the single member, record it in the appropriate minute book, and get it passed on the date signed by the single member. A special resolution must be enacted to approve:
- i) The voluntary conversion
- ii) Amending the alterations in MOA and AOA of the Company.
- iii) Increasing the number of Directors.
- File DIR-12 with the concerned ROC for an increase in the no. of Directors.
- File MGT-14 with the Registrar of Companies within 30 days of passing the required member resolution.
Note: Before filing MGT-14 you should confirm that you secure a surged number of directors to two during transforming the same into a private firm.
MGT-14 Form Attachments
- Copy of altered MOA needs to be attached (Nominee Clause has to be skipped, and the word OPC has to be skipped from the name clause of Company).
- A copy of the revised AOA would need to be attached (Articles of a private company needed to be adopted. You must note to comprise the definition of Private Company under Section 2(68) in the Company definition).
- A copy of the special resolution (learn that no copy as an explanatory statement would need to be attached if the case of OPC under section 102 does not subject to be applied for OPC)
Post filing the MGT-14, e-form INC–6 would need to get furnished with the registrar of companies in the subsequent 30 days of filing MGT-14. INC-6 would get amended post forthcoming revised rules, 2014.
Attachments of INC-6 Form
- (a) Revised MOA and AOA of the company as already attached in MGT-14.
- (b) The updated financial statements of the company duly signed and attested via the regulatory auditor of the company. (learn about the latest audited financial statements of the former year would need to get attached).
- c. Copy of board resolution authorizing the company conversion and approving the sending of the notice.
- (d) Additional attachments will be as follows-
- (i) Affidavit through all the directors of the company for the subject of conversion of OPC into private.
- (ii) Permission through the nominee for conversion as well as the PAN and Aadhaar duly attested.
- (iii) Board resolution for the authorization of transferring the shares to other proposed members including with share transfer form (SH-4). Note- No revision in the subscription clause of MOA.
- (iv) List of members including the directors list on the letterhead of the company.
- (v) List of Creditors with sums due against each of their names according to the company’s financial filings, as well as Individual NOC received from them on the intended conversion
- (vi) Special resolution copy
After the Registrar is satisfied that all procedural criteria have been met, he or she will record the alteration in its Register and issue the Certificate.