Overview
This article provides a comprehensive, plain-language explanation of Conversion of Company under the Companies Act 2013. Whether you are a business owner, director, company secretary, or chartered accountant, understanding these provisions is essential for proper compliance.
The relevant provisions are found in Sections 18 of the Companies Act 2013, read with the applicable Rules notified by the Ministry of Corporate Affairs (MCA).
What the Law Says
The Companies Act 2013 contains specific provisions governing conversion. Let us examine the key legal requirements:
Key Legal Provisions
Section 18 lays down the primary framework for conversion. The section establishes who is required to comply, the timelines for compliance, the forms to be filed, and the consequences of non-compliance.
The corresponding Rules -- notified under Section 469 of the Act -- provide the detailed procedural requirements, including the specific forms, documents, and fees applicable.
Applicability
| Company Type | Applicable? | Special Provisions |
|---|---|---|
| Private Limited Company | Yes | Some exemptions for Small Companies |
| Public Limited Company | Yes | Additional requirements for listed companies |
| One Person Company | Yes, with relaxations | Simplified compliance requirements |
| Section 8 Company | Yes, with exemptions | Certain provisions may not apply |
| Small Company | Yes, with relaxations | Reduced penalties, simplified procedures |
Detailed Explanation with Examples
Let us understand this provision through a practical example.
Example: Suppose Amit runs "TechStar Solutions Private Limited" in Faridabad with a paid-up capital of Rs. 50 lakh and annual turnover of Rs. 3 crore. Here is how conversion affects his company:
Under the current rules, Amit's company must comply with the provisions related to conversion. The key compliance steps include identifying the requirement, preparing the necessary documents, obtaining Board or shareholder approval as required, and filing the prescribed forms with the ROC within the specified timeline.
Step-by-Step Compliance Process
Timeline and Fees
| Action | Timeline | Government Fee | Penalty for Delay |
|---|---|---|---|
| Filing with ROC | Within 30 days (unless otherwise specified) | Rs. 200 - Rs. 5,000 (varies by capital) | Rs. 100 per day of delay |
| Board Resolution | Before the event/transaction | Nil (internal matter) | Not applicable |
| Shareholder Approval | Within prescribed period | Nil (internal matter) | Resolution becomes void |
Penalties for Non-Compliance
The Companies Act prescribes penalties for failure to comply with conversion provisions:
| Nature of Default | Penalty on Company | Penalty on Officers |
|---|---|---|
| Failure to comply | Rs. 25,000 to Rs. 5,00,000 | Rs. 10,000 to Rs. 1,00,000 for each officer in default |
| Late filing | Rs. 100 per day of delay | Proportionate penalty on officers |
| Continuing default | Rs. 1,000 per day | Rs. 500 per day for each officer |
Recent MCA Updates and Circulars
1. Small Company Threshold Revised (December 2025): MCA Notification G.S.R. 880(E) increased limits to Rs. 10 crore paid-up capital and Rs. 100 crore turnover. Many more companies now qualify for reduced compliance.
2. Compliance Facilitation Scheme 2026: MCA General Circular No. 01/2026 allows companies to file pending forms with relaxed additional fees.
3. DIR-3 KYC Revised: Now required once every 3 years instead of annually, reducing compliance burden for directors.
How TaxClue Can Help
At TaxClue, our team of qualified Chartered Accountants and Company Secretaries handles all aspects of conversion compliance for companies across India. Whether you need help understanding your obligations, preparing documents, or filing forms with the ROC, we have you covered.
Our services include:
- Complete compliance assessment and gap analysis
- Drafting of all required resolutions and documents
- ROC filing and follow-up
- Ongoing compliance calendar management
- Regular updates on regulatory changes
Get a free consultation today -- call us at +91 98914 64610 or WhatsApp us for immediate assistance.