Two Types of Conversion
For converting an OPC into Private Limited Company, the provisions laid down in the Section-18 of the Indian Companies Act of 2013, and the Companies (Incorporation) Rules of 2014, in particular the Rule 7(4) of the Companies (Incorporation) Rules, 2014, needs to be followed for both the conditions; voluntarily and under compulsion.
Voluntary Conversion
Voluntary conversion into a private limited company is not permitted unless two years is expired from the date of incorporation of the OPC. Though, if the paid-up share capital exceeds rupees 50 lakhs or if its average turnovers exceed INR 2 crores then within two months, the OPC could convert into a private limited company.
OPC has to communicate voluntary conversion to a registrar of companies in form INC 5 within sixty days.
For converting to a private limited company, OPC is required to have 2 directors and 2 members.
Mandatory/Compulsory Conversion
If the paid-up share capital exceeds Rs. 50 lakhs and the yearly turnover of immediately previous three consecutive financial years is more than 2 Crores rupees, then it is obligatory to convert an OPC into Private Limited Company.
Such company has to compulsorily convert to a private or public limited company within a period of 6 months from the date when the paid-up share capital exceeded 50 lakhs rupees or the last date of the related period in which the average annual turnover surpasses 2 Crore rupees.
The conversion is made by passing a special resolution in the general meeting. It is checked for a No objection certificate in writing from the creditors, and the other members.
- Intimating to RoC
The concerned ROC should first be communicated through the prescribed method that the OPC is now required to convert itself into a private limited company.
- Passing the Board Resolution
The shareholders of the OPC should hold a General Meeting for passing the resolution for raising the paid-up capital (if needed), no. of shareholders, and appointment of directors for meeting the requirements of the Private Limited Company. For converting an OPC to a Private Limited Company, there should be at least 2 shareholders and 2 directors.
Furthermore, a board resolution should be passed by the shareholders for approving the alteration of the Memorandum of Association (MOA) and Articles of Association (AOA) of the OPC.
- Application for conversion of OPC into Private Limited Company
Thereafter, the company has to file an application to the registrar along with a copy of the resolution within fifteen days of passing the resolution.
The registrar then confirms on the application details filled to be correct and fees are being paid against the registration. The registrar issues the certificate of conversion.
