Friday, 19 May 2017
Conversion of One Person Company into Private Limited Company & Vice - Versa
As per Companies Act 2013, a One Person Company (OPC) can be converted into a Private Limited Company by voluntary conversion or mandatory conversion as the case maybe.
After the incorporation of One Person Company, it cannot be converted into a private limited company unless it has completed two years from date of incorporation of such OPC. However, it can be voluntarily converted into private limited if the said time period of two years has lapsed from the date of incorporation. The procedure for such conversion shall be in accordance with the rules and regulations laid down under section 18 of the Companies Act, 2013 and Rule 7(4) of the Companies (Incorporation) Rules, 2014.
As per section 18 of the Companies Act 2013, conversion can be done by the alteration of memorandum and articles of the company. On an application made by the company, Registrar shall, on the satisfaction of compliance of provisions of this chapter, close the former registration and issue a new certificate of incorporation, after registering the documents referred to in sub-section (1), as its first registration provided that such registration shall not affect any liabilities, debts, contracts incurred or entered into, obligations.
In case, a One Person Company has a paid-up capital more than or equal to Rs. 50 lakhs or the annual turnover for the relevant financial year exceeds Rs.2 crores, then it shall mandatorily be converted into private limited or public limited company as per Rule 7(4) of the Companies (Incorporation) Rules 2014.
As per Rule 7(4) of the Companies (Incorporation) Rules 2014, if a private company other than a section 8 company having paid up share capital of Rs. 50 lakhs or less or average annual turnover during the relevant period is Rs. 2 crores or less may convert itself into OPC by passing a special resolution in the general meeting.
No objection Certificate shall be obtained from the members and creditors of the company before passing such resolution. Copy of resolution shall be filed by the company within thirty days from the date of passing such resolution in form MGT-14. Company shall file an application for its conversion into OPC along with fees in Form INC-6.
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