A One Person Company (OPC) can be converted lawfully into a Private Limited or Public Limited company, voluntarily or mandatorily. This webpage contains exclusive information about conversion of a one person company into a private limited company, under these both conditions. Detailed information over incorporation of a one person company (OPC) and a private limited company is provided in other web-pages of this internationally reputed legal website of India.
Here, it must be noted that the conversion of an OPC into a private limited company as per Section 18 of the CA-2013 and the rules of Companies (Incorporation) Rules of 2014, shall not affect the existing debts, liabilities, obligations or contracts of the OPC; and these will inevitably be discharged by the newly formed private limited company. Under both these conditions of conversion, required are necessary alterations in the MOA and AOA of the OPC (As per the provisions provided in section 18 of the CA-2013, read with section 122 of the Act); obtaining no objection in written form from concerned members and creditors; passing a resolution in support of conversion; and satisfying the requirements of the minimum paid-up capital, and the minimum number of required members and directors. Here, it may be noted that the recommended amount of minimum paid-up capital for incorporating a private limited company is INR- One Lac; and for this purpose there are required two members and two directors at a minimum. The application for conversion is to be made in Form INC-6, to the Ministry of Corporate Affairs, Govt. of India.
This section offers information about how to convert an OPC into a private limited company, under both the conditions of the voluntary and compulsory conversions. These conversions are made in strict accordance with the rules and provisions given in the Section-18 of the Indian Companies Act of 2013, and the Companies (Incorporation) Rules of 2014, especially including the Rule 7(4) of the Companies (Incorporation) Rules, 2014.
According to the rules and regulations given in the Companies (Incorporation) Rules 2014, an OPC is mandatorily required to convert itself to a private or public limited company, if its (OPC's) total Paid-up Capital equals to or gets more than Fifty Lacs (INR-50 Lacs) or its Average Annual Turnover during the relevant period (immediately preceding three consecutive financial years) equals to or exceeds Rs. Two Crores (INR-2 Crores). Within Sixty Days of the occurrence of any of these two rigorous conditions, the existing OPC is compulsorily required to give a notice of the specified occurrence to the concerned ROC in Form INC-5 [Intimation of Exceeding Threshold]. Again, conversion of the OPC to a private or public limited company is mandatory within Six Months, counted from the date of the total paid-up capital exceeding INR 50 Lacs, or from the last day of the relevant period during which the average annual turnover exceeded INR 2 Crores. Other provisions and processes are the same as explained above, in case of the voluntary conversion of an OPC in India.