Conversion of Private Company to OPC

In Companies Act, 2013 due to many benefits offered to One Person Company such as Limited Liability, legal Status and Corporate Identity, Quick Decision Making, Flexible in Management, easy bank operation, reduced taxation burdens. Therefore the private companies are converting themselves into One Person Company.

The conversion procedure will be carried out in strict accordance with the rules and provisions given in the Section 18 of the Indian Companies Act of 2013 along with the Companies (Incorporation) Rules of 2014.

Exemptions and Advantages of OPC over Private Limited Company

  • Exemption from preparing Cash flow statements.
  • Holding Annual General Meeting is not required
  • Relaxed Companies Act provisions with regard to independent directors, remunerations paid, board meetings, quorum of meetings, director office vacation, auditor rotation.
  • The member of an OPC has to nominate a nominee with the written consent of nominee. In the event of death or in event of any other incapacity, such nominee shall become a member of an OPC.
  • Nominee can be changed anytime after informing ROC. On account of Death of a member, the nominee is automatically entitled for all shares and liabilities of OPC.
  • Business secrets won’t be leaked to anyone.
  • Flexibility in decision making process and quick solutions of issues involved.

Pre-requisites before Conversion

  • The paid-up capital of the company is less than Rs. 50 Lacs.
  • The annual turnover of the company must be less than Rs. 2 crores during the past three consecutive financial years. In case of a new company, the turnover shall be calculated from the date of its incorporation.
  • That the shareholder of the resulting OPC shall be only one Natural Individual having Indian nationality.
  • That the shareholder of the OPC must be a resident person, a person becomes a resident if he stays for 180 days in India during immediately preceding one calendar year.
  • The shareholder of the Resulting OPC must not have incorporated any other OPC, or he is not a nominee of any other OPC.
  • A minor cannot be a member or nominee of an OPC.

Compliances to be fulfilled before Conversion

That the Company has properly maintained its Book Of Account

The Balance Sheet and Profit and Loss A/c is prepared and audited.

ROC Filings are updated.

Company has paid Requisite Stamp Duty on Issue Of Share Certificate and that the Share Certificates are duly franked or endorsed with the payment of stamp duty.

The company has paid all TDS deducted and filed appropriate TDS Returns.

The company have paid Vat and Service Tax or GST and filed appropriate returns for all periods before commencing the conversion.

That the company is maintaining proper record of minutes of the meeting of its board and shareholders and keep updated registers at its registered offic

Process of Conversion

Step 1.

Issue Notice for Board Meeting to be conducted with clear Agenda To Get in-principal approval of Directors for Conversion of Private Company into One Person Company (OPC).

Step 2.

Convene Board Meeting for fixing date time and venue for Extra ordinary General Meeting and approval and issue of Notice for the same.

Step 3.

Convene Extra Ordinary General Meeting to get shareholders’ approval for Conversion of Private Company into One Person Company (OPC) and Approval of Alteration in MOA.

Step 4.

Before passing such special resolution, the company shall obtain No Objection Certificate in writing from existing members and creditors.

Step 5.

File MGT-14 and Form INC -6 with ROC.

Step 6.

ROC after verification of documents filed by the Company for Conversion and being satisfied shall issue the Certificate to the effect of Conversion of Private Company into One Person Company (OPC).

Effect of conversion on Liabilities and Contractual Obligations

  • Liabilities won’t be affected.
  • Contractual Obligations won’t be affected.
  • Debts shall be enforceable in law as if no conversion has taken place.
  • Resulting OPC shall be liable for all liabilities, contracts and debts entered.

Documents Required

List of members and list of creditors.

Copy of PAN card and Aadhaar Card of the nominee and member/shareholder.

Latest Audited Balance Sheet and the Profit and Loss Account.

No Objection letter of every creditor.

Consent of the nominee.

Proof of identity of the nominee and member/shareholder: Self attested copy of Voters Identity Card/Aadhar Card Card/Passport/Driving license.

Residential proof of the nominee and member/shareholder: Self attested copy of Bank Statement/Electricity Bill/Mobile Bill/Telephone Bill.

Affidavits from the members

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Frequently Asked Questions

Can an OPC be converted into any other company?

One Person Company cannot be converted into any other kind of Company until after two years from the date of incorporation of the OPC. However, in case the capital increases beyond Rs.50 lakhs or the annual average turnover exceeds Rs.2 crores. The OPC will cease to exist and then it must be converted to Private Limited Company within six months.

Can a Private Limited Company convert itself into One Person Company?

A Private Limited Company cannot convert itself into a One Person Company until the capital is more than Rs.50 lakhs or annual turnover is more than Rs.2 crores in the relevant amount of time.

What are the formalities after Private Limited Company is converted into One Person Company?

The following steps must be taken care of after the conversion:

  • Arrange a new PAN card for the company
  • Update Company account details
  • Make the necessary changes in Altered Memorandum and Articles of Association