Procedure for conversion of a Private Limited Company to One Person Company or OPC is regulated by Companies (Incorporation) Rule, 2014. Rule 7 of Companies (Incorporation) Rule, 2014 specifically talks about this conversion procedure.
A Private limited company can get converted to One Person Company or OPC if it has not more than 50 Lakhs rupees paid up share capital or average annual turnover during the relevant period is 2 crores rupees or less.
Relevant period means the period immediately preceding 3 consecutive financial years. However, as per this rule, company registered under section 8 of Companies Act 2013 cannot get converted to One Person Company or OPC.
This means private limited company with paid up share capital of more than 50 lakhs rupess or with average annual turnover of more than 2 crores rupees during the relevant period cannot get converted to One Person Company or OPC.
To get converted, the first thing a private limited company has to do is to pass a special resolution for such conversion in the general meeting of members.
Before placing special resolution, the private limited company is required to get No Objection certificate from all members and creditors.
To pass special resolution, the private limited company has to first call a board meeting with agenda to get approval for conversion of private limited company into One Person Company or OPC, to approve notice and explanatory statement for calling general meeting and to authorize one of the director or CS to comply with legal matters.
After conducting board meeting, authorized person has to issue notice of calling general meeting to all members, directors and auditors in accordance to Companies act 2013 clearly stating the reason and requirement of conversion of private limited company to one person company or OPC.
On the due date, the company has to hold extra ordinary general meeting to pass special resolution for conversion of private limited company to One Person Company or OPC.
Such special resolution for conversion of private limited company to One Person Company is required to be filed with register of companies within 30 days from the date of passing such resolution in Form MGT14 along with attachment of notice of EGM and certified true copy of special resolution passed in general meeting.
In the last and final step of conversion, the private limited company is required to file an application with registrar of companies in form INC6.
Form INC6 has to be filed with fees as applicable in the Companies (Registration offices and fees) Rules, 2014. In case of late filing, additional fee along with the normal fee is also required to be paid.
Documents to be filed with Form INC6 to convert private limited company to One Person Company
Following documents are required to be attached with form INC6 before filing with registrar of companies.
- Declaration by directors
- List of members and creditors
- Latest Audited balance sheet and profit and loss account
- Copy of no objection letter of secured creditors
Above declaration by directors are to be given by way of affidavit duly sworn in confirming that all members and creditors of the company have given their consent for conversion and the paid up share capital is 50 lakhs rupees or less or average annual turnover is less than 2 crores rupees, as the case may be.
Registered of companies shall issue a fresh certificate to the effect of conversion of private limited company into One Person Company or OPC after being satisfied with the documents and forms filed with them.
