Conversion of private limited company into opc

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Amresh Kumar Mishra (Querist)
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21 January 2019 Dear Sir,
One private limited company which was incorporated on 23-02-2018 has now want to convert itself into one person company (opc).
The company has conveyed general meeting and pass the resolution for it and file mgt-14 with roc.
Now, when they go to file inc-6, there are 2 problem has arisen.
1st for mandatory requirement of attaching latest audited financial statements (because company doesn't complete it's first year hence no any financial statements are yet prepared by the company)
2nd for paid up share capital: - the company was incorporated with 2k paid up capital but when data about paid up capital has been entered into inc-6 the JavaScript was come with the message that minimum paid up capital must be 1 Lakh.
So, please guide us as to how to overcome this kinds of problems.

Charu Srivastava

Charu Srivastava (Expert)
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21 January 2019 Conversion of Private company into One Person Company

(1) A private company other than a company registered under section 8 of the Act having paid up share capital of fifty lakhs rupees or less or average annual turnover during the relevant period is two crore rupees or less may convert itself into one person company by passing a special resolution in the general meeting.

(2) Before passing such resolution, the company shall obtain ‘No objection’ in writing from members and creditors.

(3) The one person company shall file copy of the special resolution with the Registrar of Companies within thirty days from the date of passing such resolution in Form No. MGT.14.

(4) The company shall file an application in Form No.INC.6 for its conversion into One Person Company along with fees as provided in the Companies (Registration offices and fees) Rules, 2014, by attaching the following documents, namely:-

— The directors of the company shall give a declaration by way 18 One Person Company (OPC) of affidavit duly sworn in confirming that all members and creditors of the company have given their consent for conversion, the paid up share capital of the company is fifty lakhs rupees or less or average annual turnover is less than
two crores rupees, as the case may be;
— the list of members and list of creditors;
— the latest Audited Balance Sheet and the Profit and Loss Account; and
— the copy of ‘No Objection’ letter of secured creditors.

(5) On being satisfied and complied with requirements stated herein the Registrar shall issue the Certificate

Amresh Kumar Mishra

Amresh Kumar Mishra (Querist)
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21 January 2019 Madam,
My 1st question is about whether the company whose age not exceed 1 year can be convert itself into one person company (opc) or not? Because in eForm INC-6, there are mandatory requirement to attach latest audited financial statement and the company whose age is below than 1 year can't able to draw it's financial statement and get it audited then how it can be able to attach latest audited financial statement in eForm INC-6?
My 2nd question is about what is minimum paid up capital required to convert private limited company into one person company (OPC)? Because eForm INC-6 requiring minimum capital for one person company (OPC) is ₹1,00,000/- whereas in the companies (amendment) act, 2015 the minimum paid capital requirement for both private limited company and public limited company was omitted.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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20 July 2024 Converting a Private Limited Company (Pvt Ltd) into a One Person Company (OPC) involves specific requirements and considerations, especially regarding the age of the company and the paid-up capital. Let's address your questions and concerns:

### 1. Conversion of Pvt Ltd Company to OPC and Audited Financial Statements

**Age of the Company:**
- As per the Companies (Incorporation) Rules, 2014, a Pvt Ltd Company can convert into an OPC if it meets certain criteria, regardless of its age. There is no specific restriction that prevents a company less than 1 year old from converting into an OPC.

**Audited Financial Statements:**
- The requirement to attach audited financial statements is mandatory for conversion to OPC using Form INC-6. However, since your company has not completed its first financial year, there are no audited financial statements available.

**Solution:**
- **Financial Statements:** Since your company is less than a year old, it hasn't completed its financial year. In such cases, you can provide unaudited financial statements along with a certificate from the director that the company has not completed its first financial year. This certificate should confirm the financial figures provided are accurate and fair.

- **Declaration:** Provide a declaration stating that the financial statements are prepared based on the books of accounts and are true and correct to the best of the director's knowledge.

### 2. Minimum Paid-Up Capital Requirement for OPC

**Statutory Requirement:**
- The requirement for minimum paid-up capital of Rs. 1 lakh for OPC is prescribed in the Companies Act, 2013, and its rules.

**Concern:**
- Your company was initially incorporated with a paid-up capital of Rs. 2,000. The INC-6 form's JavaScript validation requires a minimum paid-up capital of Rs. 1 lakh, which is contradictory to the Companies (Amendment) Act, 2015, where the requirement for minimum paid-up capital was omitted for private companies.

**Solution:**
- **Compliance:** Despite the omission in the Amendment Act regarding minimum paid-up capital, the current operational rule as reflected in the MCA's electronic forms (like INC-6) mandates Rs. 1 lakh as the minimum paid-up capital for OPCs.

- **Capital Adjustment:** You may need to increase the paid-up capital of your Pvt Ltd Company to meet the Rs. 1 lakh threshold. This can be done through fresh issuance of shares or conversion of reserves, depending on your company's specific financial situation.

### Practical Steps:

1. **Prepare Documentation:** Gather unaudited financial statements and prepare a director's certificate stating the company has not completed its first financial year.

2. **Update Paid-Up Capital:** Consider increasing the paid-up capital of the Pvt Ltd Company to Rs. 1 lakh through internal restructuring or fresh issuance of shares.

3. **File INC-6:** Complete Form INC-6 with the required documents and revised paid-up capital. Ensure all details are accurate and comply with MCA requirements.

4. **ROC Filing:** Submit Form INC-6 along with applicable fees to the Registrar of Companies (ROC) for approval.

5. **Post-Conversion:** After successful conversion, update all statutory registers, books of accounts, and comply with ongoing regulatory requirements applicable to OPCs.

For precise guidance and compliance, it's advisable to consult with a company secretary or a legal professional who can assist in navigating the specific requirements and ensure a smooth conversion process. They can also provide tailored advice based on the latest regulatory updates and interpretations.