CONVERSION OF COMPANY
Conversion of a company refers to changing the legal structure of an existing business entity into another form as permitted under the Companies Act, 2013. This process allows businesses to adapt to growth, operational changes, or regulatory requirements while maintaining business continuity. For example, a Private Limited Company can be converted into a Public Limited Company to raise funds from the public, or into an LLP (Limited Liability Partnership) for more flexible management and reduced compliance burden. Similarly, a Partnership Firm, LLP, or One Person Company (OPC) can also be converted into a Private Limited Company for better credibility and access to investment.
The conversion process generally involves board and shareholder approvals, alteration of the Memorandum and Articles of Association (MOA & AOA), filing of relevant forms with the Registrar of Companies (ROC), and issuance of a fresh Certificate of Incorporation reflecting the new entity type. Depending on the type of conversion, forms such as INC-6, INC-27, URC-1, or MGT-14 may need to be filed, along with supporting documents like NOC from creditors, list of members and directors, updated financial statements, and proof of consent from all stakeholders.
TYPES OF COMPANY CONVERSIONS
- Private Limited to Public Limited Company – For expanding operations, raising capital through public investment, or increasing brand credibility.
- Public Limited to Private Limited Company – For reducing regulatory obligations, simplifying management, and retaining ownership control.
- LLP or Partnership Firm to Private Limited Company – For attracting investors, enhancing corporate image, and limiting liability.
- Private Limited to LLP – For businesses seeking flexibility, lower compliance costs, and partner-driven management.
- One Person Company (OPC) to Private/Public Limited Company – Required when turnover or paid-up capital exceeds prescribed limits (₹2 crore or ₹50 lakh respectively).
BENEFITS OF CONVERSION
- Easier access to funding and investors
- Reduced compliance burden (in some conversions)
- Continuity of business and assets
- Enhanced credibility and market reputation
- Legal protection and limited liability
ROC FILINGS & TIMELINE
Once the documents are ready, relevant forms are filed with the Registrar of Companies within the prescribed timelines. The ROC reviews the application, and upon satisfaction, issues a fresh Certificate of Incorporation confirming the conversion. The process generally takes 15–30 working days, depending on document readiness and ROC processing time.
POST-CONVERSION COMPLIANCE
After receiving the new Certificate of Incorporation, several follow-up steps are required:
- Update statutory records – Amend the company’s statutory registers, share certificates, and books of accounts.
- PAN, TAN, and Bank Accounts – Update the company’s PAN, TAN, and all banking details with the new structure or name.
- GST, PF, and ESI Registrations – Inform respective departments (like GST, PF, and ESI) about the conversion to update records.
- Contracts and Licenses – Modify or reissue business licenses, contracts, and agreements in the new company name.
- Inform Stakeholders – Notify clients, vendors, employees, and statutory authorities about the conversion.
TAX IMPLICATIONS
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- The conversion is generally tax neutral if done as per the prescribed provisions of the Income Tax Act (e.g., LLP to Private Limited or vice versa).
- However, any change in ownership pattern or shareholding ratio during conversion may attract capital gains tax or stamp duty.
- Businesses should review their tax liabilities, carried-forward losses, and credits before initiating the conversion.