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Fundamentals of Credit Management Analysis Report

One Person Company (OPC) has some limitations compared to private limited companies. If you plan to convert your OPC to Pvt. Ltd Company (PLC) for better opportunities and facilities, you can apply for the conversion according to the Companies Act, 2013, and the provision of the Companies Incorporation Act, 2014 (Section-18), you can convert your One Person Company to Private Limited Company. The conversion of OPC to a PLC or private limited company will not affect the existing liabilities and debts, obligations, or contracts with other companies of the existing one-person company. The company will turn into a private limited company with all its responsibilities.

If you cannot prove that you can repay the loan amount or your business is profitable enough, the bank or investor will not issue a loan for business development. Feeling depressed and stressed how to create such a C.M.A.? Contact us now to make a CMA report online. We have 10 years of experience in CA/CS that will prepare an authentic CMA report according to your requirement to get instant loan sanction from the investors.

How an OPC Can Be Converted to Pvt. Ltd Company?

There are two distinctive ways through which an OPC can be converted into Pvt. Ltd. Company. They are:

  1.  Voluntary conversion
  2.  Compulsory conversion

Clarification of Voluntary and Compulsory Conversion

1 Voluntary Conversion

A voluntary conversion to a private limited company is not permitted before the completion of 2 years as One Person Company from the day of incorporation. The next term for voluntary conversion is financial turnover. If the One Person Company’s paid-up share is more than Rs. 50 lakhs or the annual turnover is Rs 2 crores, the company will automatically turn into a voluntary Pvt Ltd Company within 2 months. Once the company fills up the mentioned criteria and converts into a private limited company, The OPC authority needs to inform the ROC (Register of Companies) through the form INC-5 within the next 60 days of voluntary conversion.

2 Mandatory or Compulsory Conversion

If the circumstances of the OPC are like the following, the authority can convert it to Pvt. Ltd. Company.
1. The paid-up share capital crosses the capital of Rs 50 lakhs
2. The average turnover of the last 3 years of consecutive financial years exceeds more than 2 crores.
When these two terms are fulfilled, the company authority can apply for the private limited company conversion in the next 6 months.

The Mandatory Requirement for OPC to PVT Conversion

The mandatory requirements for One Person Company to Private Limited Company are as follows:

MoA and AoA Alteration

The Memorandum of Association (MoA) and the Article of Association (AoA) of one Person Company have to be altered to the following section of 122(3) of the Companies Act, 2013. These changes must be conducted and implemented during the process of company conversion under Section 18/1 of the Companies Act and the rule of 6(1) of the Company Incorporation Rule of 2014.

Minimum Requirement Compliance

While converting OPC to Pvt. Ltd. Company or a Public Limited Company (as the case may be), you must adhere to the minimum requirements of the conversion in rule 6(2) of the Company Incorporation Rule, 2014.

The Requirements Are as Follows:

  • The directors must be increased to two or more- as per the requirement
  • The members of the company must be increased to two or more- as per
  • Maintaining the paid-up capital as per the requirement of the Act and Sub-Sections

Compliance with Section 18

The conversion of OPC to Pvt. Ltd. Company must follow the rules of section 18 of the Companies Act 2013. Then, your company will provide relevant legal requirements for fulfilling the compliance of a Pvt. Ltd. company.

Procedure for conversion of OPC to Pvt. Ltd Company

  • Notice for Meeting of Board of Directors
  • A meeting with the board of directors is arranged, and it must be conducted before 7 days of the meeting.
  • The Board of Meeting Resolution
  • The meeting would be for the Appointment of directors
  • The date time and venue of the EOGM or Extra-Ordinary General Meeting must be declared
  • Approval of draft notice of EOGM, following Section 102 of the Companies Act 2013.
  • Approval of the MoA, and AoA
  • Authorization of Company secretary or director
  • File the required form INC-5 and submit it to ROC (Register of Companies)

Preparation and Circulation of Draft Minutes

Within 15 days of the Board Meeting, prepare the Draft Minute, and circulate them to all the selected directors to get their comments. You can send it through Speed Post, Hand, Regular Post, Courier, or E-mail. Mention the detailed guidelines on preparing and signing up for the communities of the Board Meeting.

Alteration of Memorandum and Articles

According to the Companies Information Rules, 2014, 6(1), the alteration of the MoA, and AoA of one person or company should be done by passing a resolution that companies the rules of section 122 (3) of the Companies Act, 2013. This compliance makes it easy to convert OPC to Pvt. Ltd. Company.

Director Appointment

As a Pvt Ltd company requires at least 2 directors, you have to appoint directors to convert the OPC Company to a private limited company.

Shareholder Approval

Shareholder approval is also essential while planning for OPC to private limited company conversion according to the Companies Act 2013. Written approval is required.

Application for conversion of OPC to a Private Limited Company

Once all the mentioned processes and steps are completed, you need to file an application to the concerned ROC along with the following documents:
  • Copy of special resolution
  • Reformed MOA and AOA
  • List of proposed members, and its directors with consent letters
  • List of creditors
  • Copy of NOC of every creditor with the application for conversion
  • The latest audited balance sheet with profit and loss mentioned  
  • Consent of the nominee
  • Proof of identity of the member and nominee
  • Residential proof of the member and nominee
  • Copy of PAN card of the member and nominee
Are you feeling complicated? Don’t worry, Online Legal India is here with you to make the entire job easy. Contact us now.
How We Work?
  1. Associates Collect Information
  2. Payment Is Done!
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  4. Our CA/CS Apply Online For You
  5. Waiting for ROC Approval
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  7. Congrats! OPC is successfully converted to Pvt. Ltd. company
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Frequently Asked Questions (FAQs)
What is OPC to Pvt. Ltd. Company?
When you want to convert your One Person Company to a Private Limited Company, you need to follow some specific process to comply with the Companies Act 2013 and the rules of 2014. Then, you can avail of the benefit of a Private Limited Company.
Can an OPC voluntarily convert to a Pvt. Ltd. Company?
Yes, OPC can be voluntarily changed to Pvt. Ltd Company. A voluntary conversion to a private limited company is not permitted before the completion of 2 years as One Person Company from the day of incorporation. The next term for voluntary conversion is financial turnover. If the One Person Company’s paid-up share is more than Rs. 50 lakhs or the annual turnover is Rs 2 crores, the company will automatically turn into a voluntary Pvt. Ltd Company within 2 months.
What if I do not want to create a Pvt. Ltd company from OPC?
If the terms mentioned above are satisfied, your OPC will voluntarily convert to Pvt. Ltd. Company. Contact Online Legal India to learn more.