Conversion of Pvt Ltd to OPC
A PLC (Private Limited Company) may become an OPC (One Person Company) under the Companies Act of 2013, which provides a process for changing one kind of business into another. Section 18 of the Act specifically allows the conversion of an existing registered private limited company as of April 1, 2014.
Overview
- When a co-founder or promoter leaves a private limited company (PLC), it may become necessary to convert the company into a one-person operation.
- The duties and contractual obligations of the company prior to conversion are unaffected by the conversion of a PLC to an OPC; these obligations, liabilities, and claims will be legally enforceable, and the resulting OPC will be held accountable.
- Prerequisites for becoming an OPC from a private corporation.
- The paid-up capital of the company’s shares shall not exceed Rs. 50 lakh.
- Over the preceding three years, the company’s annual turnover shouldn’t have exceeded 2 crore rupees.
- Indian nationals should be the new OPC’s stockholders.
- A shareholder in the new OPC should be an Indian citizen. A person is deemed a resident of India if they spend 180 days there in a calendar year.
- The shareholder should not own any other OPCs and should not be a member of any other OPC.
Benefits of Conversion of Pvt Ltd to OPC
- An annual general meeting cannot be called since an OPC is only allowed to have one director and one shareholder.
- Since the company’s director and shareholder is the sole proprietor, they are free to make decisions on their own.
- OPC shareholders are not required to distribute the net profit to third parties. Since they are the only proprietor, they are able to keep all of the profits.
It is not necessary to create a cash flow statement as part of their financial statement.
Checklist/Requirements
- A copy of the board resolution
- A copy of the updated AOA and MOA
- A statement from the directors
- Creditors’ NOC
- Copy of NOC from shareholders
- Audited Financial statements
Process of Conversion of Pvt Ltd to OPC
Step 1: Hold a board meeting
Step 2: Hold an Extraordinary General Assembly
Step 3: Save MGT-14
Step 4: Conversion File
Step 5: Private Limited Company Conversion
Step 6: Issue of Share Certificate
Key Deliverables
- Certificate of incorporation
- MOA and AOA Share Certificates have been updated.
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