There are a couple of ways to convert a One Person Company into a Private Limited
Company. This can be done voluntarily but the right procedure for the same has to be
followed. The OPC can be fulfilled provided a few situations are met. You will get to know
about compulsory and voluntary conversions from here.
There are two ways of converting a One Person Company into a Private Limited Company as
per the act. The conversion can be a voluntarily one or by compulsion but cases a proper
procedure is to be followed.
If an OPC fulfils any of the situations given below, then it must convert to a Private
Limited
1. If the paid-up capital of the OPC exceeds Rs. 50 lakhs.
2. If the average turnover in any three consecutive financial years is more than Rs. 2 crores.
Voluntary Conversion
When an OPC has paid up share capital that exceeds Rs.50 lakhs and the annual turnover is
above Rs.2 crores, then it is obligatory for them to convert into a private limited company.
During the conversion, the members have to just pass a special resolution in the general
meeting.
Before the resolution is passed, a No objection Certificate has to be taken in writing from the
creditors, and the other members.
Within fifteen days of the passing of the resolution, company needs to file an application to
the registrar along with a copy of the resolution.
After the application is filled and the fee payed, the registrar then makes a decision after
studying the documents and issues the certificate of conversion.
When an OPC is incorporated, the conversion cannot happen before two years. The
procedure of voluntary conversion of an OPC into a private limited company falls under the
section 18 of the Companies Act.
The company can convert into another company coming under the same act by the
modification of the memorandum of the association and articles of the association in
accordance with the provisions.
An application has to be made by the company to register along with the relevant documents
which are essential for the conversion.
On submission of all relevant documents, the registrar has the power to issue a certificate of
incorporation.
The registration of the company under this act will not affect any liabilities, debts, or
obligation before and after the conversion.
After the conversion is done, it is obligatory for a private limited company to have a paid up
share capital of Rs. 50 lakh and also an annual turnover should not be less than 2 crores,
failing which, it can convert back to an OPC by passing of a special resolution.
From above, you would have got to know the requirements to convert a One Person
Company to a Private Limited company. Basically, you should know that for a voluntary
conversion, you need to wait for a couple of years from the incorporation of the OPC. After
the conversion, it can still be converted to an OPC on a special resolution.