Conversion of OPC to LLP

 The One person Company cannot be converted directly into the Limited Liability Partnership Form. Because an OPC company has only 1 member. Likewise, in case of LLP registration it should have at least 2 persons who shall on conversion and they become partners of LLP. So direct conversion of OPC to LLP is impossible.

But there is another way to convert OPC to LLP. The case relies on the conversion of OPC to Private Limited company and then from PVT Ltd to LLP. This is a 2 step conversion procedure.

Let us take a look into the Companies Act, 2013

The section 18 of the companies at 2013 states that a company registration under any class can convert itself to any other class as a company by altering the MoA and AoA in accordance with the Provisions of this chapter.

Likewise, it also states that the registrar should make an application for the company to satisfy himself that the statement is applicable for registration of companies and the same process should carry for the exchanging of the company firms and incorporation certificate also should generate as the old case.

The company registration will not replace any of the debts, liabilities, obligations or contracts of the former companies. The duties and conversions will remain same as the old one. Everything will be in the same manner as if the registration had not been done.

Companies Rule 2014 – Incorporation Rule

Limited Liability Partnership conversion from OPC | Solubilis

The rule 6 states that OPC can convert into PVT Ltd company Or Public limited company registration, in case of the below criteria.

The first case is, if the OPC exceeds its annual paid up capital share to fifty lakh rupees and its average annual turnover in the relevant period exceeds 2 crore rupees, then they can stop the company as a One person company and can start into any other forms.

 The OPC registration in Bangalore says, is is required to convert into either Public or Private within six months of the date on which its paid up capital is increased to 4 lakh or the relevant period on which its annual turnover exceeds to 2 crore. The One person company can turn into either a private limited company with minimum of 2 directors and 2 members or the public company with at least 7 members and 3 directors under the rule section 18 of the Act.

The one person company changes its memorandum of association and article of association by passing a resolution in regarding with the sub section 3 of the section 122 of the Act to make certain effects to the conversion rate.

Main Criteria

The OPC within 60 days from the date of applicability of sub-rule (1) should provide a notice to the Registrar in Form INC.5 to state that the One person company registration is now changing its form into a Public Limited company or a Private Limited Company due to the share capital or turnover increment than the threshold limit.

 If there is any breakage or breaches in the provisions of these rule by the OPC or any officer of the one person company, then he or the firm charged by 10 rupees as fine or with a further fine which may extended up to thousand rupees for every day until the violations gets close.

 One person company can itself convert its Form of business into other modes like a private limited company or a public limited company by increasing its actual member’s or director’s count into more and also by maintaining the paid-up capital as per the requirements of the section 18 of the companies Act.

Condition behind OPC

Limited Liability Partnership conversion from OPC | Solubilis

No OPC can able to convert as a private limited company by voluntarily unless2 years of expiration from the incorporation date.

Exceptional Case

We can except the above case by increasing the paid up capital beyond fifty lakh rupees or the turnover to beyond two crore rupees.

Our View

Simply, we can convert a one person company into private limited company or Public company by obeying the rules and regulations under the companies Act, 2013. OPC into a private company is not only converting the name itself, by transferring we are double the members into 2. Here the number of directors in a PVT company is minimum 2. The registrar of the company then close the former registration and register the new company according to the relevant documents and issue a fresh certificate of incorporation.

What are the documents required for conversion

Limited Liability Partnership conversion from OPC | Solubilis

●       Reformed Memorandum of Association (MoA) and Article of Association (AoA)

●       Copy of recent audited balance sheet and Loss Account

●       Copy of board resolution authorization notices to creditors

●       List of creditors; and

●       Copy of No Objection Certificate

What are the procedures for Conversion?

  1. For conversion, the company should get no objection from the creditors.
  2. Should pass a resolution for the conversion of OPC to PVT Ltd Company.
  3. An affidavit from the director of the company to state that all the creditors of the company have given their consent for conversion.
  4. Within 30 days the registrar of companies should file a copy of special resolution
  5. The company’s filled copy of Form INC.6 for its conversion to Pvt Ltd.

What are the effects of conversion of an OPC to Pvt/ Public?

The registrar will issue a fresh incorporation certificate at the time of Application approval

Ownership of the company will transfer from sole member to multiple members.

There is no restrictions on the capital amount or turnover in case of new company.

Transfer of the company to other one will not affect any debts, liabilities, obligations or contracts made in the existing company.

Limited Liability Partnership Act, 2008

Conversion of Private Company into Limited Liability Partnership

We can convert a Public Limited company or Pvt Ltd company to LLP by obeying the rules and regulations of clause 58 and schedule IV and III of the LLP Act. Form 18 should be filled with Form 2 by registrar for such conversions.

Conversion of Company into Limited Liability Partnership

  • Conversion of Private Limited Company into LLP Means all the shareholders of the company should be partners of an LLP. No one else can be the partners.
  • Likewise, there is no security interest at the time of application in the assets of the company.
  • Every partner should get a DIN from the central Government
  • All the E-Forms should sign with the help of Digital signature for the purpose of LLP Incorporation.

Leave a Reply