conversion of opc into company- series- 81
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Conversion of OPC Into Company- Series- 81TRANSCRIPT
DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary [email protected] GOYAL DIVESH& ASSOCIATES Contact OnContact OnContact OnContact On [email protected] For Any Query Or Question Or Suggestions1 PROCESS FOR CONVERSION OF OPC INTO PRIVATE LIMITED COMPANY GOYAL DIVESH & ASSOCIATES,Practicing Company Secretary "Everything is easy, if you are crazy about it And Nothing is easy, when you are lazy about it." BACKGROUND: TheIntroductionofOnePersonCompany intothelegalsystemisamovethatwould encouragetheentrepreneursentersinto corporateworld.Thiswillnotonlyenable individualcapabilitiestocontributeeconomic growth,butalsogenerateemployment opportunity.OPC ofsole-proprietorand companyformofbusinesshasbeenprovided with concessional /relaxed requirements under the Companies Act, 2013. The concept of OPC is still in its nascent stages inIndiaandwouldrequiresomemoretimeto mature and to be fully accepted by the business world. With passage of time, the OPC mode of businessorganizationisallsettobecomethe mostpreferredformofbusinessorganization especially for small entrepreneurs. One most important feature of OPC is that the risks mitigated are limited to the extent of the value of shares held by such person in the company SERIES NO 81 81 81 81 CONTENT OF ARTICLES A. Background B.MethodofConversionofOPC into Private Limited Company. C. ProcessofMandatoryConversion ofOPCintoPrivateLimited Company D. Penalty E.ProcessofVoluntaryConversion ofOPCintoPrivateLimited Company. F.Post Conversion Requirements. DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary [email protected] GOYAL DIVESH& ASSOCIATES Contact OnContact OnContact OnContact On [email protected] For Any Query Or Question Or Suggestions2 There is TWO METHOD for conversion of OPC into Private Limited Company: 1.Mandatory Conversion of OPC into Private Limited Company. 2.Voluntary Conversion of OPC into Private Limited Company. A. Mandatory conversion of OPC into Private Limited: AsperRule6ofTheCompanies(Incorporation)Rules,2014:-ConversionofOnePerson Company to Private Limited Company is mandatorily required under the Companies Act, 2013. Mandatory conversion of One Person Company to Private Limited Company is required in case a One Person Company meets certain parameters a)Effectivedateofincreaseinthepaid-upsharecapitalofaOnePersonCapitalbeyond rupees fifty lakhs AND b)Increaseofaverageannualturnoverduringtheperiodofimmediatelyprecedingthree consecutive financial years is beyond rupees two crores. In the above case, the One Person Company shall be mandatorily required to convert itself into either a private or a public companyWithin a Period of Six Months Within a Period of Six Months Within a Period of Six Months Within a Period of Six Months. In this article, we look at the procedure for conversion of one Person Company into a private limited company or limited company. STEPS TO BE TAKEN FOR CONVERSION OF ONE PERSON COMPANY Process for conversion is given in as Rule 6 of the Companies (Incorporation) Rules, 2014 S. No. S. No. S. No. S. No.STEPSACTION A. A. A. A.BOARD MEETINGISSUENOTICEinaccordancewiththeprovisionsof section173(3)oftheCompaniesAct,2013,for conveningameetingoftheBoardofDirectors.Main agenda for this Board meeting would be: AGENDA : DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary [email protected] GOYAL DIVESH& ASSOCIATES Contact OnContact OnContact OnContact On [email protected] For Any Query Or Question Or Suggestions3 To discuss with directors that Company has crossed the Limitsasgivenaboveandthereisneedtomandatory conversion of OPC into Company. PassBoardresolutionforincreaseinNo.ofDirectors. (Minimum 2 Directors) Passaboardresolutiontogetinprincipalapprovalof Directors for increase shareholder of the Company. (Minimum 2 Share holders) PassResolutiontogetshareholdersapprovalfor Alteration in MOA & AOA of Company. There is required to pass Share holder resolution. But as per Section 122(1) there is no needtoholdEGMbyOPC,itshallbesufficientif,incaseof OPC,theresolutionis communicatedbythememberofthecompanyandenteredintotheminutesbooks required to be maintained u/s 188 and signed and dated by member and such date shall be deemed to be the date of the meeting for all the purpose under this Act. D. D. D. D.ROC FORM FILINGForconversionofOPCinCompanyfewE-formswillbe filed with concerned Registrar of Companies atdifferent stages as per the details given below: E- Form INC-5AsperRule6(4)TheCompanies(Incorporation)Rules, 2014: OPCwithin60daysfromtheperiodwhenConditionas mentionedaboveattractgivenoticetoROCinforming that it has ceased to be OPC and that it is now required to convert itself into a private company or public company. ATTACHMETN: I.Certified true copy of board resolution where person giving notice has been authorized DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary [email protected] GOYAL DIVESH& ASSOCIATES Contact OnContact OnContact OnContact On [email protected] For Any Query Or Question Or Suggestions4 II.Copy of the duly attested latest financial statementsIII.CertificatefromaCharteredAccountantinpractice forcalculationofaverageannualturnoverduring the relevant period This certificate is mandatory to attachifthethresholdlimitisexceededonaccount of average annual turnover. IV.Anyotherinformationcanbeprovidedasan optional attachment(s). E- Form INC-6As per Section 18 of CA-2013 OPCwithin6Monthfromthedateofexceedingof threshold Limits. ATTACHMETN: I.Certified true copy of board resolution where person giving notice has been authorizedII.Altered copy of MOA & AOA. III.Copy of the duly attested latest financial statementsIV.CertifiedtruecopyofSpecialresolutionwhere person giving notice has been authorized V.Anyotherinformationcanbeprovidedasan optional attachment(s). Duty of ROC: ConcernedRegistrarofCompanies(ROC)willchecktheE-formsandattached documents filed by the Company for Conversion of Private Company into One Person Company(OPC).OnbeingsatisfiedthatCompanyhascompliedwithprescribed requirementstheRegistrarshallissuetheCertificatetotheeffectofConversionof Private Company into One Person Company (OPC). PENALTY: If One Person Company or any officer of the One Person Company contravenes the provisions oftheserules,OnePersonCompanyoranyofficeroftheOnePersonCompanyshallbe punishable with fine which may extend to ten thousand rupees and with a further fine which DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary [email protected] GOYAL DIVESH& ASSOCIATES Contact OnContact OnContact OnContact On [email protected] For Any Query Or Question Or Suggestions5 mayextendtoonethousandrupeesforeverydayafterthefirstduringwhichsuch contravention continues. B.Voluntary conversion of OPC into Private Limited: WhenaOnePersonCompanygetsincorporated,itcannotconvertitselfto PrivateorPubliccompanyforaperiodofnotlessthantwoyearsfromthe date of incorporation. Ifthetimeperiodhaselapsedandtwoyearstimeperiodisover,aOne PersonCompanycanapplyforconvertingitselfto PrivateLimited Company or Public limited company. TheConversionprocessshouldbedoneaspertherulesandregulationslaid downbytheCompaniesAct,2013underSection18,andRule7(4)ofthe Companies (Incorporation) Rules, 2014. Section 18 of the Companies Act, 2013: AcompanyofanyclassregisteredunderthisActmayconvertitselfasa companyofotherclassunderthisActbyalterationofmemorandumand articles of the company in accordance with the provisions of this Chapter. Where the conversion is required to be done under this section, the Registrar shallonanapplicationmadebythecompany,aftersatisfyinghimselfthat theprovisionsofthisChapterapplicableforregistrationofcompanieshave beencompliedwith,closetheformerregistrationofthecompanyandafter registeringthedocumentsreferredtoinsub-section(1),issueacertificateof incorporation in the same manner as its first registration. Theregistrationofacompanyunderthissectionshallnotaffectanydebts, liabilities, obligations or contracts incurred or entered into, by or on behalf of thecompanybeforeconversionandsuchdebts,liabilities,obligationsand DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary [email protected] GOYAL DIVESH& ASSOCIATES Contact OnContact OnContact OnContact On [email protected] For Any Query Or Question Or Suggestions6 contracts may be enforced in the manner as if such registration had not been done. STEPS TO BE TAKEN FOR CONVERSION OF ONE PERSON COMPANY Process for conversion is given in Section 18 of Companies Act, 2013 and Rule 7(4) of the Companies (Incorporation) Rules, 2014 which are reproduced for your reference: S. No. S. No. S. No. S. No.STEPS STEPS STEPS STEPSACTION ACTION ACTION ACTION B. B. B. B.BOARD MEETINGISSUENOTICEinaccordancewiththeprovisionsof section 173(3) of the Companies Act, 2013 and SS-I for conveningameetingoftheBoardofDirectors.Main agenda for this Board meeting would be: AGENDA : TodiscusswithdirectorsthatCompanywantto convert into OPC into Private Limited Company. Pass Board resolution for increase in No. of Directors. (Minimum 2 Directors) Pass a board resolution to get in principal approval of Directors for increase shareholder of the Company. (Minimum 2 Share holders) PassResolutiontogetshareholdersapprovalfor Alteration in MOA & AOA of Company. ThereisrequiredtopassShareholderresolution.ButasperSection122(1)thereis no need to hold EGM by OPC, it shall be sufficient if, in case of OPC, the resolution is communicated by the member of the company and entered into the minutes books requiredtobemaintainedu/s188andsignedanddatedbymemberandsuchdate shall be deemed to be the date of the meeting for all the purpose under this Act. E. E. E. E.ROC FORM FILINGFor conversion of OPC in Company few E-forms will be filed with concerned Registrar of Companies at different DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary [email protected] GOYAL DIVESH& ASSOCIATES Contact OnContact OnContact OnContact On [email protected] For Any Query Or Question Or Suggestions7 stages as per the details given below: E- Form INC-6As per Section 18 of CA-2013 OPC within 30 days of passing of Special Resolution file form with ROC. ATTACHMETN: VI.Certifiedtruecopyofboardresolutionwhere person giving notice has been authorizedVII.Altered copy of MOA & AOA. VIII.Copy of the duly attested latest financial statementsIX.CertifiedtruecopyofSpecialresolutionwhere person giving notice has been authorized X.Anyotherinformationcanbeprovidedasan optional attachment(s). Duty of ROC: ConcernedRegistrarofCompanies(ROC)willchecktheE-formsandattached documentsfiledbytheCompanyforConversionofPrivateCompanyintoOne PersonCompany(OPC).OnbeingsatisfiedthatCompanyhascompliedwith prescribedrequirementstheRegistrarshallissuetheCertificatetotheeffectof Conversion of Private Company into One Person Company (OPC). POST CONVERSION REQUIREMETNS POST CONVERSION REQUIREMETNS POST CONVERSION REQUIREMETNS POST CONVERSION REQUIREMETNS A. A. A. A.Arrange new PAN No. of the company B. B. B. B.Arrange new stationary with new name of the Company C. C. C. C.Update company bank account details D. D. D. D.IntimatealltheconcernedauthoritieslikeExciseandsalestaxetcaboutthe status change E. E. E. E.Printed copy of new MOA & AOA. DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary [email protected] GOYAL DIVESH& ASSOCIATES Contact OnContact OnContact OnContact On [email protected] For Any Query Or Question Or Suggestions8 IMPORTANT POINT TO BE KEPT IN MIND WHILE CONVERSION Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC. residentinIndia"meansapersonwhohasstayedinIndiaforaperiodofnotless thanonehundredandeightytwodaysduringtheimmediatelyprecedingone financial year A person can be member in only one OPC. Where a natural person, being member in One Person Company becomes a member in another OPC by virtue of his being a nominee in that OPC, then such person shall meettheeligibilitycriteriaofbeingamemberinonlyoneOPCwithinaperiodof onehundredandeightydays,i.e.,he/sheshallwithdrawhismembershipfrom either of the OPCs within one hundred and eighty days. Thisbriefwriteupanattempthasbeenmadetounlockthetechnicalitiesrelatedto ConversionofPrivateCompanyintoOnePersonCompanyprescribedunderCompanies Act, 2013. I believe that the procedure for Conversion of Private Limited Company into One Person Company through this article would be of some help for you all. Conversion of status of company from private to OPC would become effective form the date ofreceiptoftheapprovaloftheRegistrarthroughthechangeofnamewouldbecome effective on the issue of fresh Certificate of Incorporation. TheCompaniesAct,2013wasexpectedtosimplifytheprovisionsbutonthecontraryit broughtlotofrestrictionsondoingbusiness.Thereforetheprivatecompaniesare converting themselves into One Person Company. AOnePersoncompanycanbeeasilymanagedwithlesscompliancetobefollowed, conversionoftheSoleProprietorfirmorPartnershiporPrivateLimitedCompanytoOne Person Company would benefit most people.