Conversion of OPC into a Private Limited Company or Public Company

A one-person company (OPC) is a type of business where there is only one member, as opposed to a private company, where there must be at least two members, and a public company, where there must be at least seven members. The Conversion of a One Person Company (OPC) to other forms of the Company, as the case may be, is expressly provided for under Section 18 of the Companies Act of 2013 and Rule 6 of the Companies (Incorporation) Rules of 2014.

Types of Conversion of OPC into Different Company Forms.

Voluntary Conversion

Since 1 April 2021, there is no waiting period. A One Person Company can voluntarily convert into a private limited company or a public company at any time after its incorporation; the earlier rule that an OPC had to complete two years before converting voluntarily has been removed. Mandatory conversion has also been abolished: an OPC is no longer required to convert when its paid-up share capital exceeds ₹50 lakh or its average annual turnover exceeds ₹2 crore, so it may continue as an OPC for as long as it wishes and convert when its business needs call for it.

Conversion Requirements

1. To give effect to the Conversion, the Memorandum of Association and Articles of Association must be changed in line with Section 122(3) of the Companies Act of 2013 and Rule 6(1) of the Companies (Incorporation) Rules of 2014.
2. Complying with the minimal conditions stated under Rule 6(2) of the Companies (Incorporation) Rules, 2014, for converting a One Person Company (OPC) to a private limited company or public limited Company, as applicable, must also be adhered to:

a) The minimum number of directors should be increased to two or three, as appropriate.
b) Increase the required minimum membership to two or seven, as appropriate.
c) No minimum paid-up capital is required. The minimum paid-up capital requirement for private and public companies was removed in 2015, so an OPC does not need to infuse capital only to convert
d) The Companies Act of 2013’s section 18 must be followed completely.

Procedure for Conversion of OPC into a Private or Public Company

1. Call a Board of Directors Meeting, in accordance with Section 173 & SS-1

• At least seven days’ prior notice of the board meeting must be given to all of the Company’s directors at the addresses on file with the Company. Shorter notice may be given if there is an urgent business matter.
• Include the Notice’s Agenda, Notes for the Agenda, and a Draft Resolution.
• Call a meeting of the Company’s Board of directors and adopt the required board resolution:

2. Appointment of Directors in accordance with the conversion business structure chosen

• To determine the day, date, time, and location of the Company’s Extraordinary General Meeting, also referred to as EGM.
• To approve the proposed EGM notice and its accompanying explanatory statement in accordance with Section 102 of the 2013 Companies Act.
• To accept the proposed Articles of Association and Memorandum of Association.
• To give the Director or Company Secretary the go-ahead to sign and publish a notice of the Extraordinary General Meeting and take any other actions that may be required to carry out the Board’s decision.
• To give the Director or Company Secretary permission to complete the necessary paperwork, sign it, and send it back to the Registrar of Companies or the ROC.

Within 15 days following the completion of the board meeting, a draft of minutes should be prepared and distributed to all directors for feedback through hand delivery, registered mail, speed post, email, or courier. However, in the case of a One Person Company (OPC), the entry of the resolution in the minutes-book, duly signed and dated by the one director, shall be deemed to be the date of the Board of Directors meeting as per Section 122(4) of the Act.

3. Changes to the articles and memorandum pertaining to Rule 6(1) of the 2014 Companies (Incorporation) Rules

To give effect to the Conversion and make required modifications incidental thereto, the memorandum and articles of the One Person Company or OPC shall be amended by passing a resolution in accordance with section 122(3) of the Act.

4. Director Nominations

Additionally, the One Person Company (OPC) will make an effort to appoint directors in accordance with the minimum number of directors required by law, which is typically two or three.

5. Form MGT-14 submission to ROC pertaining to Section 117 of the 2013 Companies Act

Within 30 days of adopting the Special Resolution, the Company must submit a copy of the resolution in Form MGT-14 to the Registrar of Companies (ROC).

6. In accordance with Section 18 of the Companies Act of 2013 and Rule 6(3) of the Companies (Incorporation) Rules of 2014, submit Form No. INC 6:

In accordance with section 18 of the Act and Rule 6 of the Companies (Incorporation) Rules, 2014, the One Person Company must file its application for conversion with the Registrar of Companies in Form No. INC-6. It must also include the paperwork listed below, as well as the fees outlined in the Companies (Registration Offices and Fees) Rules, 2014.

• Copy of the Special Resolution and the Modified Memorandum and Articles of Association,
• A list of the prospective members and the organization’s directors, together with their signatures,
• Along with the Creditors’ list,
• A copy of the most recent, legally verified, or audited financial statements, including the profit and loss account, the audited balance sheet, and
• According to a statement made by the Board of Directors in a properly executed affidavit, all of the Company’s directors and members have approved the Conversion.

7. Section 13(3) of the Companies Act of 2013 and Rule 29(2) of the Companies (Incorporation) Rules of 2014, the new certificate of incorporation:

Once Forms MGT-14 and INC-6 have been approved, the Registrar issues a fresh Certificate of Incorporation in the company’s new name, confirming its conversion into a private (or public) company.

Post-Conversion Requirements

Under Section 18(3) of the Companies Act, 2013, the conversion does not affect any debts, liabilities, obligations or contracts incurred or entered into by the OPC before conversion. They continue and can be enforced as if the conversion had not taken place, so lenders, customers and suppliers deal with the same legal entity under its new name.

Each Company also:

1. 1. Print the revised Certificate of Incorporation together with the updated Alteration Memorandum of Association and Articles of Association.
   2. Outside of each location where it conducts business, it should paint or affix its name and the address of its registered office in visible characters in adherence to Section 12(3)(a) of the Companies Act, 2013.
   3. If it has a seal, have its name etched on it in clear lettering as per the Companies Act of 2013’s Section 12(3)(b).
   4. Print the Company’s registered office address, corporate identity number, phone number, fax number, email address, and website address, if applicable, on all correspondence, notifications, and other official documents adhering to Section 12(3)(c) of the Companies Act, 2013.

1. Have the Company’s printed on bills of exchange, promissory notes, and other legal documents with respect to Section 12(3)(d) of the Companies Act, 2013.
2. Inform all banks, regulatory authorities, utility service providers and other relevant stakeholders of the company’s new name and status.

Apply for a necessary amendment in accordance with the following Acts

1. Goods and Services Act
2. Shops & Establishment Act
3. Factories Act
4. Inter-State Migrant Workmen Act
5. Private Security Agency Act
6. Employees Provident Fund Organization
7. Employees’ State Insurance Corporation
8. Other Labor Laws
9. Industry-Specific Laws.
10. Essential Points for One-Person Businesses (OPCs)

• A minor is not permitted to become a member or nominee of a One Person Company.
• Minors cannot hold one-person company shares with beneficial interests.
• A One Person Company cannot be incorporated as, or converted into, a Section 8 (not-for-profit) compan.
• One-person companies are not permitted to engage in non-banking financial investment activities, such as purchasing securities from other Body Corporates.

Why Kanakkupillai for Company Conversion?

Since 1 April 2021, an OPC can convert into a private company at any time, but the process still calls for familiarity with the pertinent provisions of the Companies Act, 2013. Following the correct procedures and filing an Application for Conversion in accordance with the provisions of the Companies Act 2013 will result in the Ministry of Corporate Affairs (MCA) issuing a Certificate to the effect of Conversion. Since this is the case, it is highly recommended that you get good professional guidance from experienced professionals.