Conversion of One Person Company into a Private Limited Company

  • June 28, 2022
  • Dushyant Sharma
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One person company can be converted into a private limited company by two ways as per the act. Conversion can be voluntarily or by compulsion but in both ways a proper procedure is to be followed.

Procedure of Converting an One Person Company into Private Limited Company is:

In Case of Voluntary Conversion:

  • When an OPC is incorporated it cannot seek conversion before two years. After the time has lapsed then, it can totally start the procedure of conversion into private or public limited company.
  • The voluntary conversion of opc into private company comes under section 18 of the companies act.
  • Company that comes under this act can convert itself into another company coming under this act by the alteration of the memorandum of association and articles of association in accordance with the provisions.
  • The company has to make an application to registrar along with the documents attached which are essential for the conversion.
  • Once the registrar is satisfied, he in compliance with the registrar of companies has the power to issue the certificate of incorporation in the same manner as issues earlier.
  • The registration of the company under this act shall not affect any debts, liabilities or obligation before the conversion and are enforced after the conversion.
  • After the conversion, it is mandatory for a private limited company to have a paid up share capital of 50 lakhs and an annual turnover may not be less than 2 crores. In case of failing, it can convert back to OPC by passing a special resolution.

In case of Compulsory Conversion:

  • When a One Person Company has paid up share capital exceeding 50 lakhs and annual turnover above 2 crores, then it is compulsory for them to convert into a private limited company.
  • On conversion, the members just have to pass a special resolution in the general meeting.
  • Before passing the resolution, one has to obtain No objection Certificate in writing from the creditors, and other members.
  • The company has to file an application to the registrar along with a copy of the resolution within fifteen days of passing the resolution.
  • After filing an application and paying the fees, the registrar makes a decision after scrutinizing the documents and then issues the certificate of conversion.
  • It is to be noted, that now E-Forms are to be filed with the Registrar of companies.

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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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