Procedure for Conversion of Private Limited Company into OPC
Conversion of Private Company into One Person Company (OPC)
Any previously licensed Private Limited Company spread across the country on any of the economic sectors of production, manufacturing business & commerce or services can apply for this Conversion of OPC. To figure out the procedure and ways to convert into the OPC, we have provided here with the detailed brief. The conversion process will be carried out in strictly with the rules and provisions given in Section 18 of the Indian Companies Act of 2013, the Companies (Incorporation) Rules of 2014, particularly the sub-rules of rule 7 of the CR-2014.
Conditions for Conversion of Company to OPC
- The private limited applicant must not have the total paid-up capital greater than 50 Lacs rupee.
- The Average Annual Turnover in 3 consecutive preceding budget years must be less than 2 Crore. In case the company is new and have not completed three years, then the turnover shall be reckoned from the date of its incorporation.
- The shareholder of the resulting one person company must be only one Natural Individual having Indian nationality.
- The shareholder of the OPC must be a resident person. A person becomes a resident if he/she stays for 180 days in India during the immediately preceding single calendar year.
- A minor cannot be a member or nominee of an OPC.
Checklist For Before Conversion
- The private limited company must maintain its accounts and Financial Statements (prepared and audited).
- The company must be filed all the ROC Returns.
- Making sure the company has paid requisite stamp on the issue of share certificate, and that share certificates are duly endorsed with the payment of stamp duty.
- Check whether the company has filed appropriate TDS Returns.
- Check the company has paid its Vat and Service Tax / GST and filed appropriate returns for all its period before the commencement of conversion.
- Check whether the company is keeping its proper minutes of the meeting of its board(records), shareholders, and having the updated registers at its registered office.
- Whether the company has licensed registration under the establishment act (shop) of the relevant state where they have offices, malls, shops, warehouse and such.
- Whether the pvt ltd company has followed the professional tax provision, if applicable in your state (where the registered office of the company is situated and the states in which it has its regular employees).
- Whether the company has obtained its registration under Provident Fund (PF), if the total number of employees is more than 20, and with the ESIC registration; if the number of employees is more than 10, paying dues as and when required under PF and Employees’ State Insurance Scheme of India (ESIC).
Process of Converting Private Company into One Person Company
1. Calling of Board Meeting
A notice has to be issued in accordance with the provisions of section 173(3) of the Companies Act, 2013, for amending a meeting of the Board of Directors. The pivotal agenda for this Board meeting would be:
- To receive the principle approval of Directors for Conversion of Private Company into One Person Company (OPC).
- On Fixing date, time, and place for holding Extra-ordinary General meeting (EGM) to get written approval of shareholders, with any Special Resolution for Conversion of Private Company to OPC. This Conversion must be by Rule 7 of Companies (Incorporation) Rules, 2014.
- Discussion on approving the notice of the Extra ordinary General meeting (EGM) along with the Agenda and Explanatory Statement to the notice of General Meeting (to be annexed) as per section 102(1) of the Companies Act, 2013.
- On authorizing the Director to issue Notice of the Extra-ordinary General meeting (EGM) as approved by the Director of Board.
2. Call for Extraordinary General Meeting (EGM)
Printed issue notice of the Extra ordinary General meeting (EGM) to all Members, Directors, and the Auditors of the private limited company in accordance with the provisions of Section 101 of the Companies Act, 2013. A private limited company’s shareholders must first approve a special resolution at an extraordinary general meeting (EGM). The firm must get a certificate of no objection from the current members and creditors before adopting the resolution.
3. NOC from Creditors
Before adopting a special resolution in the EGM, the firm must have a No Objection Certificate (NOC) from the current creditors and shareholders. You must get the NOC in writing. The applicant company must create and audit its profit and loss account, balance sheet, financial statements, and other books of account before undergoing conversion. The applicant company must also file all returns and documentation with the ROC.
4. The Holding of General Meeting
After issue notice, hold the Extra-ordinary General meeting (EGM) on due date and move the necessary Special Resolution; to Convert the Pvt ltd Company into OPC.
Verify that the firm auditor is present. Check to see if the leave of absence is approved or not in accordance with Section 146 of the Act if the corporate auditor is not present.
Pass a special resolution to obtain the consent of the shareholders to the conversion of a private limited company into an OPC and to the approval of the modified Memorandum of Association and Articles of Association (Articles of association).
5. ROC Form Filing
As per Rule 7(3), any private limited company irrespective of product or service is mandated to file Special Resolution passed by shareholders for Conversion of Company to OPC with concerned companies’ registrar.
So, the file MGT.14 within 30 days or a period of one month of passing the Special Resolution, with the concerned Registrar of Companies, prescribed fees and with following attachments:
a. Notice of EGM
b. A certified true copy of Special Resolution
6.The Issue of the Certificate of conversion
The private limited Company’s concerned registrar (ROC) will have to check the E-forms and all the attached documents filed by the Company for Converting a Private Company into One Person Company (OPC). On being satisfied by the registrar that Company has followed prescribed requirements, now the Registrar can issue the certificate with the effect of conversion of Private Limited Company into the one-person company(OPC).
Documents Required for Converting a Company to OPC
The respective company should produce an application in Form No.INC.6 for the conversion into One Person Company with the prescribed fee structure as provided in the Companies Rules (2014), by offering the following documents such as like
- The Board of Directors of the company must provide a declaration by an affidavit duly sworn in confirming that all members, creditors of the company have unanimously made their consent for conversion, their paid-up share capital company is fifty lakhs rupees or average or less, annual turnover is less than two crores rupees if there is any such.
- The creditors’ list along with the members’ list.
- The finally prepared Audited Balance Sheet and the Profit, Loss Account.
- No Objection letter copy of secured creditors.
Post Conversion Requirements by OPC
- Arrange the OPC’s new PAN card.
- Arrange for new stationery bearing the OPC’s name.
- Update the bank account information for the company.
- Notify the appropriate agencies, such as the Income Tax Department and GST, of the status change.
- Create a printout of the modified MOA and AOA.
Benefits of Converting Company to OPC
1. Limited Liability
There can be various unforeseen events, beyond our control, during the business course which can terminate the entire business and put all the personal assets of the proprietor at risk, if in the form of business is proprietorship business.
However, in the case of a One Person Private Limited Company, the shareholders’ liability is limited to the extent of his/her shareholding in the company. As per the corporate form of business, any business loss shall not affect the personal property of the owner and it is the Company that will bear the entire financial loss.
2. Legal status with complete control Companies
The 2013 Act recognized the concept of One Person Company as a Private Limited business structure. As per the act, we all should be aware that the company’s business form is widely used business form and it creates confidence in the specific parties doing business with the company.
An easier fact to understand that any dealers or suppliers or customers feel more ease to deal with a private limited company as compared to a proprietorship firm.
0One of the major advantages in One Person Private Limited Company business form is here that the owner is the sole person who can take any sort of quick decisions with respect to the business of the Company and enjoy, take over the complete control.
3. Easy Banking Operations
Even the banks also prefer to offer their services to OPC rather than a proprietorship. It is logically easy for One Person Companies to get a loan from banks rather than a proprietorship. To be precise, we can say that One Person Company is the perfect alternative of a proprietorship business.
4. Taxation relaxation
The Company Act 2013 has given a lumpsum power to One Person Company to carry forward its business as a Company and enter a valid business contract with management and customers. Hence, all the provisions of tax planning are available to One Person Company.
5. Less Compliance and Management
From the above-mentioned points, it can be easily understood that the concept of One Person Company form of business is the safest and easiest form of business to manage.
Also, to managing the compliances of One Person Company is simpler when compared to routine Private Limited Company business.
How to apply for conversion of a Company to OPC?
The following statements are included on Form-INC-6 when applying the conversion of private company into a one person company.
- A statement on the form with an affidavit from each director stating that the company’s members and creditors have approved the conversion to an OPC, the paid-up capital is less than 50 lakhs, and the turnover is less than 2 crores.
- Affidavits from the members attesting to the fact that the company’s paid-up capital is less than 50 lakhs and that its average annual revenue over the previous three financial years has been less than 2 crores.
- A statement attesting that the company’s paid-up capital is less than 50 lakhs and its annual revenue is less than 2 crores from a licensed chartered accountant.
- The company’s most recent audited balance sheet and profit and loss statement.
- All creditors have signed a letter of no objections.
- List of the company’s officers and directors.
- A copy of the EGM’s notices, agenda, and informative statement, as well as the board resolution and the specific resolution adopted during the meeting.
- OPC requires a modified version of the MOA and AOA, containing any relevant clauses.
Why Kanakkupillai for Conversion of Private Company to OPC?
For conversion of a private company to OPC registration online reach Kanakkupillai. We guarantee a smooth interaction with the government by taking care of all the paperwork. To help people have reasonable expectations, we provide clarity on the incorporation procedure. You may get the best legal services with only a phone call thanks to a staff of over 500 knowledgeable business consultants and attorneys.
Your virtual accountant at Kanakkupillai is a robust choice for this work – With 20 offices, 10+ plus years of industry experience, competitive & economical costs; we have a team of professional specialists who will Convert an OPC in the lowest possible turnaround time. Call our Specialists @ 7305 345 345 NOW for private limited company registration online!!!
FAQ On One Person Company (OPC)
OPC permits a single person to own and control the business while other business forms like Partnership Firms, Limited Liability Partnerships (LLP), Private Limited Companies (PLC), and Public Companies require two or more people to partner with and manage a firm
No, One person company (OPC) cannot invest or buy shares of any other company.
An OPC has a maximum of fifty shareholders, excluding employees and directors, may be registered as an OPC. In India, OPC Asset Solutions has between 51 and 200 employees.
Incorporate OPC: Within 20 days of the data of RUN approval, form SPICe must be filed for the incorporation of the OPC after the name has been approved. If the registered office address and the correspondence address are different, the business must file form INC-22 within 30 days of registering form SPICe.
In the event that an OPC member ceases to be a member due to death, incapacity to enter into a contract, or a change in ownership, the firm must file form INC-4. The user must fill up the same form with information on the new OPC member.
If an OPC's average annual revenue over the three most recent financial years exceeded two crore rupees or its paid-up share capital exceeded fifty lakh rupees, the OPC is required to transform into a private or public company.
When Compulsory Conversion occurs, the OPC must inform the ROC that the above mentioned threshold limit has been exceeded and that the OPC must be converted into a Private Limited Company by filing Form INC-5 with MCA. The form needs to be turned in within 60 days after going above the threshold limit.
Within sixty days of exceeding threshold limits, Form INC-5 must be filed.
An OPC must submit Form INC-6 in order to become a private or public business. Yes, In order to become an OPC, the private firm must also complete form INC-6.
One Person Companies must submit an application in Form INC-6 within six months of the effective date on which the following threshold limit was surpassed if their paid-up share capital reaches fifty lakh rupees or their average annual turnover during the relevant period exceeds two crore rupees.
To qualify as a member and nominee of an OPC, a natural person must be an Indian citizen and resident of India.
An individual is only permitted to belong to one OPC.
When a nominee withdraws their consent or when a member notifies a change in the nominee, Form INC-4 must be filed.
Section 8 of the Act prohibits the incorporation or conversion of One Person Companies. One Person Companies are not permitted to engage in non-banking financial investment operations, such as purchasing securities from other Body Corporates.
The Board of Directors of the Company must obtain board approval before establishing a Sole Proprietorship after forming a Private Limited Company.
A private company that has a share capital of 50 lakh rupees or that had an average annual turnover of 2 crore rupees during the relevant period and is not a company established under Section 8 of the Companies Act 2013 may convert their private company into a one person company (OPC).