The conversion of an OPC- One Person Company into Private Limited Company as per Section 18 of the Companies Act, 2013 and the provisions of Companies (Incorporation) Rules of 2014 should be discharged by a newly formed Private Limited Company. These rules will not affect the existing debts, liabilities, obligations or contracts of the OPC. There are two ways of converting an OPC into a private limited company -:
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.
Mandatory /Compulsory Conversion -This is a condition where you need to convert an OPC to private limited company compulsorily. It is because an OPC has paid up share capital that 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 for anyone to convert.
Documents Required for Conversion
If an OPC fulfils any of the situations given below, then it must convert to a Private Limited Company.
1. If the paid up capital of the OPC exceeds Rs. 50 lakh.
2. If the average turnover in any three consecutive financial years is more than Rs. 2 crore.
Form INC-6 shall be filed by an OPC for conversion of an OPC into private or public company.
Form INC-6 shall be filed within 30 days in case of voluntary conversion and within six months of mandatory conversion.