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Company conversion in Surat

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    Company conversion

    What is Company Conversion?

    A company can be Private Limited, Public Limited, One Person Company (OPC), Section 8 Company, or Government Company. But as the business grows, the legal structure has to be altered. That is where company conversion comes into play. Company conversion makes sure that the company is in accordance with the existing business needs, regulatory needs, and future growth plans. 

    Why Is a Company Strike Off?

    Types of Company Conversions:

    1. Private Limited to Public Limited

    2. Public Limited to Private Limited

    3. One Person Company (OPC) to Private Limited

    4. Section 8 Company to Private Limited

    Conversion from Private Limited to Public Limited Why Convert a Private Limited Company into a Public Limited Company?

    Some common reasons for conversion includes: 

    • To collect funds from the public via IPOs.
    • If it contains over 200 members.
    • Expansion of business operations.
    • The need to transfer shares to multiple shareholders.

    Step-by-Step Process for Conversion:

    The process for voluntary strike off involves several steps:

    1. Board Meeting:

    1. Serve notice under Section 173(3) of the Companies Act, 2013. 
     
    2. Pass a resolution of the board to convert and change the Articles of Association (AOA). 
     
    3. Fix the date of the Extra-Ordinary General Meeting (EGM). 

    2. Issue EGM Notice:

    • Give at least 21 days’ notice to members, directors, and auditors of the meeting. 

    3. Conducting EGM:

    • Pass the required Special Resolution to convert. 

    4. Filing with ROC:

    1. Form MGT-14: Filed within 30 days of the adoption of the resolution. 
     
    2. Prepare INC-27: Application for conversion with supporting attachments. 

    Conversion from Public Limited to Private Limited Why Convert a Public Limited Company into a Private Limited Company?

    Some reasons why companies opt for this conversion include: 

    • A decrease in the required minimum number of directors.
    • The company wants to reduce compliance burdens.
    • Reduction in business scale.
    • Delisting of shares.
    • The company wants to limit shareholding.

    Step-by-Step Process for Conversion:

    Once the ROC receives the application, it follows a structured process: 

    1. Board Meeting:

    1. Approve the conversion plan.    2. Approve changes in Memorandum and Articles of Association.    3. Fix the date for the General Meeting. 

    2. Issue EGM Notice:

    Notify members, directors, and auditors at least 21 days before the meeting. 

    3. Holding General Meeting:

    Pass the Special Resolution for conversion.

    4. Filing with ROC:

    1. Form MGT-14: Filed within 30 days.    2. Form RD-1: Application for conversion submitted to the Regional Director.

    5. Advertisement & Notices:

    1. Publish an advertisement in newspapers.  2. Notify creditors, debenture holders, and regulatory bodies. 

    6. Final Approval:

    Once approved by the Regional Director, file From INC-28 with the ROC.

    Conversion from One Person Company (OPC) to Private Limited When is OPC Conversion Required?

    Some reasons why companies opt for this conversion include: 

    • When the number of directors increases beyond one.
    • When the number of members exceeds one.
    • Expansion of business.
    • Requirement for raising funds.
    • If paid-up capital exceeds ₹50 lakhs.
    • If the average annual turnover of past 3 years exceeds ₹2 crores.

    Types of OPC Conversion:

    1. Voluntary Conversion

    After 2 years of incorporation.

    2. Compulsory Conversion

    When the financial limits are exceeded. 

    What Happens When You Don't File the Forms on Time?

    If you don’t submit the required forms by the deadline, you’ll face penalties: 

    Late Fee:

    You’ll have to pay INR 100 for each day you delay filing.

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    On the Company:

    INR 1,000 per day, subject to a maximum of INR 10 Lakhs.

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    On Every Officer in Default:

    INR 1 Lakh, plus INR 100 per day of delay, subject to a maximum of INR 5 Lakhs. 

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    What is a Director Identification Number (DIN)?

    A Director Identification Number (DIN) is an 8-digit unique identification number issued to directors of companies. It is a mandatory requirement under the Companies Act and has lifetime validity. 

    Step-by-Step Process for Conversion:

    If the director has already completed DIR-3 KYC, they can simply complete WEB-Based Director’s KYC by: 

    1. Board Meeting:

    Approve conversion and fix EGM date.

    2. Issue EGM Notice:

    Notify stakeholders at least 21 days prior.

    3. Holding EGM:

    Approve conversion and amendments in MOA & AOA.

    4. Filing with ROC:

    1) Form MGT-14 (within 30 days). 2) Form INC-5 (for compulsory conversion within 60 days). 3) Form INC-6 (within 30-180 days, based on type of conversion).

    Timely filing of DPT-3 ensures compliance, prevents legal risks, and maintains your company’s credibility with financial institutions and stakeholders. 

    Conversion from Section 8 Company to Private Limited

    Why Convert a Section 8 Company into a Private Limited?

    The process for voluntary strike off involves several steps:

    To undertake profit-making activities.

    To engage in commercial business.

    To remove restrictions imposed under Section 8.

    Step-by-Step Process for Conversion:

    1. Board Meeting:

    Approve conversion and fix EGM date.

    2. Issue EGM Notice:

    Notify members, directors, and auditors.

    3. Holding EGM:

    Pass the Special Resolution for conversion. 

    4. Application to Regional Director:

    File Form RD-1 with supporting documents.

    5. Final Approval & ROC Filing:

    1. Obtain approval from the Regional Director. 
     
    2. File Form INC-28 and Form MGT-14 with ROC. 

    Get answers to all your queries

    What is the minimum time required for company conversion?

    The process generally takes 30-60 days, depending on regulatory approvals.

    Do I need to change my company’s PAN and GST registration after conversion?

    No, the PAN remains the same. However, you may need to update GST and other registrations. 

    Can I convert my Private Limited Company to an LLP?

    Yes, conversion from Private Limited to LLP is possible by following a separate legal procedure.

    What happens to existing contracts and agreements after conversion?

    All contracts and agreements remain valid, but necessary updates may be required. 

    Is shareholder approval mandatory for company conversion?

    Yes, shareholders must approve the conversion through a Special Resolution. 

    This guide provides a structured overview of company conversions. If you're planning to convert your business, ensure compliance with legal formalities and seek professional assistance if needed!