A private limited company can convert itself into a one-person company (OPC) if it has a paid-up capital of less than Rs. 50 lakh and an annual turnover of less than Rs.2 crore. The reason for converting the private limited company into an OPC may be certain private, commercial or managerial.
One Person Company is a business entity run by a sole owner with the benefit of limited liability as that of Private Limited Company. In addition to this, One Person Company is a separate legal entity from its members, offering protection to its shareholders and can be formed by only one director. Following points should be kept in mind while converting a Private limited company into OPC:
• Rule 7 of Companies (Incorporation) Rules, 2014 should be followed.
• No objection certificate from existing members & Creditors.
• The special resolution passed by shareholders.
| Status of Private Company | As per S. 3 of the Companies Act, 2013, OPC is given the status of Private Companies. |
| Various Exemptions | An OPC enjoys various statutory exemptions from holding annual or extraordinary general meetings; signature on annual returns can be done by Director himself, restriction on voting rights, demand for the poll, notice for the meeting, Signature on financial statements, etc. |
| Limited Liability | The liability of the shareholder is limited and personal assets are safe. The liability of the shareholder will only be limited to the unpaid subscription money in his name. OPC is a separate entity and there will be a true distinction between the promoter and the company. |
| Single Owner | There is only one owner who can act both as a shareholder as well as the director. |
| Complete Control | This leads to fast decision making and execution. Yet he/she can appoint as many as 15 directors in the OPC for administrative functions, without giving any share to them. |
| Legal Status & Social Recognition | One Person Company is a Private Limited Structure in the eyes of law, which gives suppliers and customers a sense of confidence in business. |
| Separate Legal Entity | A company is a legal entity and a juristic person established under the Act. Therefore a company form of organization has a wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts. |
| Easy Compliances | OPC is one of the easiest forms of corporate entities to manage. Very few ROC filing is to be filed with the Registrar of Companies (ROC). No need to conduct the Annual General Meeting (AGM), so lesser compliance cost. |
| Perpetual Succession | A company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership. |
| Borrowing Capacity | A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns. |
| Easy Transferability | Shares of a company limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with a share certificate can easily transfer shares. |
| Own Property | A company being a juristic person, can acquire, own, enjoy and alienate, property in its name. No shareholder can make any claim upon the property of the company so long as the company is a going concern. |
Step 1: Preparation of Documents: A Board meeting of directors needs to be conducted a notice will be prepared and a date for the extraordinary general meeting (EGM) will be decided. During this time, we’ll complete all the formalities, from filing conversion forms to alteration of your Memorandum and Articles of Association. Preparation of Documents A Board meeting of directors needs to be conducted a notice will be prepared and a date for the extraordinary general meeting (EGM) will be decided. During this time, we’ll complete all the formalities, from filing conversion forms to alteration of your Memorandum and Articles of Association.
Step 2: Filing of Documents: Within 30 days of the Extra Ordinary General Meeting, MGT 14 needs to be filed along with altered AOA and MOA, INC 6 will also be filed for which the balance sheet of last year needs to be attached, list of members and creditors will also need to be attached along with a NOC from them.
Step 3:Conversion to one Person Company: Within 5-7 days you will get approval. We will also send you the new AOA, MOA, and PAN card and the new certificate of incorporation.
1. List of all members and creditors
2. Latest balance sheet
3. Letter of ‘No Objection’ from the members and creditors
4. Letter of Consent from the Directors by way of affidavit
5. Notice of Extra General Meeting (EGM), which is held to gain the approval of Directors for the conversion of the Private Limited Company to One Person Company.
6. A certified true copy of Special Resolution
7. Altered Memorandum of Association
8. Altered Articles of Association
9. A certified true copy of Board Resolution is optional
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