Overview of Conversion of Private Limited Company to OPC

When a promoter of a private company chooses to resign from his position, the structure of the company tends to collapse. In such a situation, the professional suggests the option of conversion of private limited company to OPC. An OPC is a business structure that needs only one shareholder for its incorporation.

What is the Concept of Private Limited Company?

A Private Limited Company (PLC) is a privately-owned business structure. The members of this company enjoy the feature of limited liability. That means the liability of shareholders is limited to the extent of shares held by them. Normally, people with high aspirations and goals tend to choose a private company as a business format.
As per the provisions of the Companies Act, 2013, a minimum of two and a maximum of two-hundred individuals can become members of a private company. Further, a minimum of two and a maximum of fifteen directors are required to run business operations. Furthermore, a foreign national/ NRI is eligible to become a director of a Private Limited Company.
As per the Companies (Amendment) Act, 2015, the minimum capital requirement of Rs 1, 00,000 for private limited companies, has been removed.

What is the Concept of One Person Company?

The concept of OPC or One Person Company is relatively new in the Indian Corporate Sector. This structure needs only a single individual for its incorporation. However, a person is not allowed to incorporate more than one OPC.
A One Person Company is different from a Sole Proprietorship. A significant difference between the both is that a proprietorship firm is not a separate legal entity. In contrast, an OPC is a separate legal entity. Further, a nominee cannot become a nominee for more than one company.

Benefits of Conversion of Private Limited Company to OPC

The benefits of the conversion of Private Limited Company to OPC are as follows: Ease in Filing Annual Returns
An OPC involves comparatively less annual and ROC compliance than any other business structure. There is no need for the director to take approval from a Company Secretary for filing the Annual Returns.
Ease in Taking Decisions
Running an OPC is easy as it involves swift and fast decision making than any other business structure.
No AGM Required
The provisions concerning an OPC are not that stringent like of private company. Therefore, holding an Annual General Meeting is not compulsory for a One Person Company.

Minimum Requirements for the Conversion of Private Limited Company to One Person Company

In India, the minimum requirements for the conversion of private limited company to OPC are as follows: The paid-up share capital of a private limited company should not increase Rs 50 lakhs;
The annual turnover of a private limited company must not exceed Rs 2 crore;
A Minimum of one Shareholder;
A Minimum of one Director;
An individual can become both Shareholder and Director;
A Minimum of one Nominee;
No Minimum Capital Requirement;
The name of a company must include “OPC” or “One Person Company” as a suffix;
The directors of a private company need to pass a special resolution for acquiring approval from the shareholders; Only a natural person with Indian Citizenship can become the shareholder of the proposed OPC;
The shareholder must be an Indian Resident. That means a person who has stayed in India for at least one-hundred and eighty days in the previous calendar year;
A Minor is not eligible to become a shareholder or member of a One Person Company;
The Shareholder of a proposed One Person Company cannot become a nominee or shareholder in any other OPC.

Conditions for the Conversion of Private Company to One Person Company

The conditions for a private company before undergoing the process of conversion are as follows: The applicant company needs to prepare and audit its Profit and Loss A/c, Balance Sheet, Financial Statements and other Books of Account;
The applicant company needs to file all the returns and documents to the ROC before undergoing conversion;

A private company must pay-off its stamp duty on the issue of share certificate;
A private company must file its TDS Returns for all the deductions;
A private company must file its GST Returns;
The company should comply with all the provisions of the professional tax.

Procedure for Conversion of Private Limited Company to One Person Company

The steps involved in the procedure of conversion of private limited company to OPC are as follows: Convene Board Meeting
The directors need to send a notice for Board Meeting at least seven days before the meeting. The notice must include the agenda of the meeting as an attachment.
Hold Board Meeting
Directors need to pass a board resolution for approving Conversion of Private Limited Company to OPC. They also need to decide the business items as follows:
Fix date, day, place, time of the EGM (Extraordinary General Meeting);
For the approval of the notice of EGM;
For the approval of the explanatory statement and agenda of the EGM;
To authorise directors to issue a notice for Extraordinary General Meeting;
Convene EGM
Directors need to send a notice for EGM to all the members, auditors, and directors of the Company. They need to send it at least twenty-one days before the date of the EGM.
NOC from Creditors
The company needs to obtain No objection Certificate in a written form from the Creditors and Shareholders of the company.
Hold EGM
The shareholders need to pass a special resolution for approving the conversion of private limited company to OPC.
File Form MGT-14
The directors of the company need to file MGT-14 with the ROC within thirty days from the passing of the resolution. The attachments with the form are as follows:
Notice of EGM together with a copy of explanatory statement;
Certified Copy of Special Resolution;
Altered Memorandum of Association;
Altered Article of Association;
Certified Copy of Board Resolution.
File Form INC-6
Now file INC-6 as the application for the conversion of private limited company to OPC. The attachments with the form are as follows:
List of Members;
List of Creditors;
Latest Audited Balance Sheet;
Updated Profit and Loss Statement;
NOC from the creditors;
NOC from the shareholders;
Declaration from the directors stating the following:
Consent has been obtained from all the Creditors has been obtained;
Paid-up share capital of the company is Rs 50 lakhs;
Annual Turnover is less than Rs 02 crores.
Issuance of Certificate
After scrutinising the documents, the ROC will issue a certificate for the Conversion of Private Limited Company to OPC.

Post Conversion Requirements

The Post conversion requirements are as follows:
Arrange a New PAN (Permanent Account Number) of the company;
Arrange stationery and letter-head with the new name of the company;
Update the company’s bank account details;
Inform all the authorities about the conversion;
A Printed copy of the new MOA and AOA.

₹ 4,999/ Original ₹ 9,999 (50.01% OFF)