The process of converting a private limited company to a One Person Company (OPC) involves several steps and compliances. Here is a general outline of the conversion process:
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The process of converting a private limited company to a One Person Company (OPC) involves several steps and compliances. Here is a general outline of the conversion process:
1. Board Resolution:
The board of directors of the private limited company must pass a board resolution approving the conversion and authorizing the directors to take necessary actions to initiate the process.
2. Shareholders' Approval:
A special resolution must be passed by all of the shareholders of the respective company which will approve the conversion from a private limited company to an OPC. The resolution should be passed in a general meeting of the shareholders, following the prescribed procedures.
3. Obtaining No Objection Certificate (NOC):
The existing shareholders and creditors of the private limited company need to provide their consent by way of a No Objection Certificate (NOC) for the proposed conversion to an OPC.
4. Directorship and Shareholder Changes:
As an OPC can have only one director and one shareholder, the necessary changes need to be made to ensure compliance. Additional directors and shareholders may need to resign or transfer their shares to the single shareholder.
5. Appointment of Nominee Director:
Every OPC must have a nominee director who will take charge in the event of the sole member's incapacity or death. A person needs to be appointed as a nominee director, and their consent and relevant declarations should be obtained.
6. Modification of the Memorandum of Association (MOA) and the Articles of Association(AOA):
The memorandum and articles of association of the private limited company need to be amended to reflect the change in status from a private limited company to an OPC. The necessary alterations must be made and filed with the Registrar of Companies (ROC).
7. Application to Registrar of Companies (ROC):
A formal application for conversion, along with the required documents and prescribed fees, needs to be submitted to the ROC. The application should include the necessary forms, such as Form INC-6 (Application for Conversion of a Company into a One Person Company).
8. Compliance with Post-Conversion Requirements:
After the conversion, the OPC needs to comply with the ongoing requirements and regulations applicable to OPCs, such as filing annual financial statements, conducting annual general meetings, maintaining statutory registers, etc.
It is advisable to seek professional advice and assistance from a company secretary or legal expert to ensure proper compliance with the applicable laws and regulations during the conversion process.
Companies may choose to convert from Private Limited to an OPC to enjoy the benefits of limited liability, separate legal entity status, and a more simplified compliance structure. It is particularly beneficial for businesses operated by a single promoter or owner.
Private limited companies require a minimum of two directors and two shareholders, whereas an OPC can be formed with just one director and one shareholder. An OPC offers limited liability protection to the sole member, and the compliances are relatively simpler compared to private limited companies.
Yes, the conversion requires the approval of the shareholders through a special resolution passed in a general meeting. A specific majority (usually three-fourths) of the shareholders' votes is required to pass the resolution.
Upon conversion to an OPC, the existing shareholders of the private limited company become the sole member of the OPC, holding their shares in the same proportion. The shareholding pattern remains unchanged.
Once converted to an OPC, the company must comply with the regulatory requirements applicable to OPCs. This includes filing annual financial statements, conducting annual general meetings, and complying with other statutory obligations.
An OPC can convert back to a private limited company only when it meets the criteria of having at least two members and has crossed the thresholds of the average turnover and paid-up share capital as specified under the Companies Act, 2013.
An OPC can be converted into a private limited company or a public limited company, subject to meeting the respective eligibility criteria and following the prescribed conversion procedures.
Some benefits of operating as an OPC include limited liability protection, separate legal entity status, ease of management with a single director, simplified compliance requirements, and the ability to access certain government schemes and incentives available to small businesses.
It's important to note that the conversion process involves legal procedures and compliance requirements. It is advisable to consult with a professional, such as a company secretary or a legal expert, to ensure proper compliance with the applicable laws and regulations during the conversion process.