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Conversion of Private Company into OPC

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Conversion of Private Company into OPC – An Overview

  • The conversion of PLC (Private limited company) into an OPC (One Person Company) is provided as per the Companies Act, 2013, which implements a mechanism to convert one class of company into another. Section 18 of the Act, explicitly grants the conversion of an already registered private limited company starting from 1 April 2014.
  • The conversion of Private Company into OPC would not affect the responsibilities and contractual obligations of the company before conversion, and such claims, liabilities, obligations shall be enforceable by law, and the resulting OPC shall be liable for them.

Benefits of conversion from PLC to OPC

Limits Director’s Liability

Businesses often need to borrow money. With sole proprietorships, proprietors are personally liable for all the debt. So if it cannot be repaid by the business, the proprietor would have to sell his/her car, house or jewellery to do so. In an OPC, only the amount invested in starting the business would be lost; all personal property would be safe.

Continuous Existence

If a promoter were to operate as a <a target=”_blank” href=’https://vakilsearch.com/sole-proprietorship-registration-india’>sole proprietorship</a>, rather than an OPC, the business would come to an end with his/her death. Since an OPC has a separate legal identity, it will pass on to the nominee director and, therefore, continue to exist.

Fewer Compliances

An OPC can only have one director and one shareholder, so annual filings are limited to share certificates and statutory registers.

How To Apply For Conversion of Private Company into OPC?

The application of the conversion of private limited company into a one-person company is filed using Form-INC-6 with the following statements.

  • A declaration of the form with an affidavit by all the directors that all members and creditors of the company have given consent to the conversion of company into an OPC, and that the paid-up capital of the company is less than Rs. 50 lakhs and that the turnover is less than Rs. 2 crores.
  • Affidavits from the members confirming the paid-up capital is less than Rs. 50 lakhs and the average turnover is less than two crores in the past three consecutive financial years.
  • A certificate from a practising Chartered Accountant to confirm that the paid-up capital of the company is less than Rs. 50 lakhs and the turnover is less than two crores.
  • The latest audited profit and loss account and balance sheet of the company.
  • No Objection Certificate from all creditors.
  • List of members and directors of the company.
  • Copy of the board resolution and the specific resolution taken at the EGM, along with its notices, agenda, and informative statement.
  • A modified copy of MOA and AOA, including related clauses, required for OPC.

Documents Required for Conversion of Private Company into OPC

The Form MGT-14 should be accompanied by the following attachments:

  • The EGM notice with the explanatory statement copy
  • A true certified copy of the special resolution
  • The altered MOA and AOA of the company
  • A certified copy of the board resolution.

The Form INC-6 should be accompanied by the following attachments:

  • The total list of creditors and members.
  • The latest balance sheet of the company.
  • A copy of the NOC letter of secured creditors.
  • The NOC of creditors and members.
  • The company directors should give a declaration through a duly sworn affidavit confirming that all creditors and members of the company have given their consent for conversion.

 

How To Convert Private Limited Company Into One-person Company?

Gather a board meeting
  • The directors of the company must meet and decide on a date for calling the meeting of the shareholders. Additionally, known as an Extraordinary General Meeting (EGM).
  • The notice must be drafted to shareholders along with draft resolution. This must be passed as a special resolution to be adopted by the shareholder concerning the conversion of Private Limited Company to OPC.
Issue notice of EGM
  • The notice of EGM is expected to be given to all the members, directors and auditors of the company. The date of issue of the notice must be 21 days before the date of EGM.
  • Simultaneously, along with the notice and the agenda, the draft resolution is to be given as a special resolution, and an informative statement shall be included.
No objection form all creditors
  • Initially, before the date of EGM, the No Objection Certificate (NOC) from all the creditors of the company has to be obtained.
  • A copy of the approval from creditors is to be settled before the EGM.
Conduct of EGM
  • The EGM must be handled as per the notice, on the assigned date, time and place. The EGM can pass a special resolution concerning the approval of altered MOA (Memorandum of Association) and AOA (Articles of association)
Filing of resolution with the ROC
  • As per Companies Act, 2013 all the resolutions declared as a special resolution by the members must be registered with the ROC in Form No MGT-14, along with directed attachments within 30 days from the approaching date.
  • After the endorsement of the MGT-14, the ROC records the resolution on its record.
The issue of the certificate of conversion
  • On acceptance of the application for conversion, the Registrar of Companies having jurisdiction examines the application, and if complete, it is approved and issues a certificate of Private Limited company into One Person Company.

Timeline

Free Consultation and Documentation
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Action Required by you
  • You Need to fill up the draft, Make Payment and Submit Documents to Khata Dekho
Action By Khata Dekho
  • Once the Documents are uploaded we’ll start the step -by-step process of Incorporation

Frequently Asked Questions (FAQs)

The cost to convert a Private Limited Company to an One Person Company (OPC) in India can vary. Costs may include government fees and professional fees. On average, this might cost between ₹10,000-15,000. **Fees may be subject to change. Get in touch with KhataDekho today and convert your PVT LTD to OPC.

Yes, a private company can be converted into an OPC.
Whether a Pvt Ltd company or an OPC is better depends on your situation. A Pvt Ltd company is good for businesses that plan to grow, need more investment, or have more than one owner. An OPC is great for small businesses with one owner. It simplifies management and reduces paperwork.
  • A one person company is managed by an individual whereas, PLC is managed in a group.
  • In a PLC there is no provision to appoint a nominee to a member of the company. In OPC, since there is only one person, in his/her absence the nominee will take the place of the member
  • The number of directors in OPC is one. Whereas, there are 2 directors in a private company.
Like any other company, an OPC can also spend in another company. An OPC is a sub-category of the private limited company and under its status, it can have a stake in another company, and own the same.
Yes. A one person company means that there will be only one shareholder for the company ownership, and in no way impact the ability to hire employees. An OPC can even have multiple directors.
The criteria for converting an OPC (One Person Company) to another type of business structure, such as a Private Limited Company, can include specific legal and regulatory requirements. These criteria may involve factors like the company’s paid-up capital, turnover, shareholder structure, and compliance with relevant laws.
The time limit for converting an OPC into a Private Limited Company depends on the specific legal requirements.
In an LLP (Limited Liability Partnership), partners cannot technically draw a salary. Instead, any payment they receive is termed differently. The concept of a salary is not allowed.

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