CONVERSION OF PVT LTD TO PUBLIC LIMITED
A private company can convert itself Public Limited Company by altering its Memorandum and Article of association by obtaining shareholders’ approval by way of passing of special resolution in general meeting.
CONVERSION OF PRIVATE LIMITED COMPANY TO OPC
A private company can convert itself into One person Company if the paid up share capital of such private company is less than fifty lakhs rupees and average annual turnover during the relevant period is less than two crore rupees.
Consent from all members and creditors of the company shall be taken for conversion of Private Limited Company into One Person Company.It shall alter its Memorandum and Article of association on conversion into one person Company.
CONVERSION OF OPC TO PRIVATE LIMITED COMPANY
Types of Conversion
- Voluntary Conversion
- Compulsory Conversion
Voluntary Conversion
One Person Company (OPC) may voluntary apply for conversion itself into a Private limited or Public limited only after the expiry of two years from the date of incorporation. It shall alter its Memorandum and Article of association on conversion into a private limited company or public limited company.
Compulsory Conversion
There are two conditions which need to be fulfilled for a Company to remain as One Person Company:
- It has only one person as a member.
- The paid up share capital of an OPC does not exceed fifty lakh rupees or its average annual turnover during the relevant perioddoes not exceed two crore rupees
If the paid up share capital of One Person Companyis increased beyond rupees fifty lakh or average annual turnover exceeds two crore rupees, One Person Company shall convert itself into Private limited or Public limited company, within six months of the date on which paid up share capital or average annual turnover exceeds the prescribed limit.
CONVERSION OF SOLE PROPRIETORSHIP TO PVT LTD
Small Business can be easily started with Sole Proprietorship due to less compliance requirement; it is the smallest form of business organisation. Though there are certain advantages of Sole Proprietorship concern but it has many disadvantages when compared to a limited company. When the business starts growing, more funds are required to capture market and opportunities. An investor feels more secure and has peace of mind while investing in a limited company rather than a proprietorship concern
An agreement needs to be executed by the company and the sole proprietor to convert proprietorship concern into a limited company.