{"id":9302,"date":"2020-03-04T09:00:08","date_gmt":"2020-03-04T03:30:08","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=9302"},"modified":"2020-10-26T22:39:03","modified_gmt":"2020-10-26T17:09:03","slug":"procedure-of-conversion-of-private-limited-company-to-opc","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/procedure-of-conversion-of-private-limited-company-to-opc\/","title":{"rendered":"Procedure of Conversion of Private Limited Company to OPC"},"content":{"rendered":"\n<p>A Private Limited Company tends to collapse when a Promoter or Co-founder withdraws from his position and resign the Company. In such a scenario, the best option is to convert the Private Limited Company into a One Person Company (OPC). Companies Act, 2013 enables the incorporation of OPC with a single shareholder; thereby, it provides the scope of conversion for existing Private Companies into OPC. This write-up entails all the prerequisites, advantages, procedure for the conversion of a <a href=\"https:\/\/swaritadvisors.com\/conversion-of-private-limited-company-to-opc\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">Private Limited Company to OPC<\/a>. <\/p>\n\n\n\n<div class=\"wp-block-button aligncenter\"><a class=\"wp-block-button__link has-text-color has-very-light-gray-color has-background\" href=\"https:\/\/swaritadvisors.com\/conversion-of-private-limited-company-to-opc\" style=\"background-color:#01669c\">Convert Private Limited Company into OPC Today &#8211; Apply Now<\/a><\/div>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a738413b76\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a738413b76\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-of-conversion-of-private-limited-company-to-opc\/#A_brief_about_One_Person_Company\" title=\"A brief about One Person Company \">A brief about One Person Company <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-of-conversion-of-private-limited-company-to-opc\/#Eligibility_to_convert_into_OPC\" title=\"Eligibility to convert into OPC\">Eligibility to convert into OPC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-of-conversion-of-private-limited-company-to-opc\/#Advantages_of_converting_into_a_One_Person_Company\" title=\"Advantages of converting into a One Person Company\">Advantages of converting into a One Person Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-of-conversion-of-private-limited-company-to-opc\/#Prerequisites_of_Private_Limited_Company_to_OPC\" title=\"Prerequisites of Private Limited Company to OPC\">Prerequisites of Private Limited Company to OPC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-of-conversion-of-private-limited-company-to-opc\/#How_to_convert_a_Private_Limited_Company_to_OPC\" title=\"How to convert a Private Limited Company to OPC?\">How to convert a Private Limited Company to OPC?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/procedure-of-conversion-of-private-limited-company-to-opc\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_brief_about_One_Person_Company\"><\/span>A brief about One Person Company <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Unlike, Private Company, the One Person Company is a relatively new concept of business introduced by Companies Act 2013. As the name suggests, OPC is a business entity that can be registered with a single person. Often entrepreneurs misinterpret <a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/swaritadvisors.com\/one-person-company-registration\" target=\"_blank\"><strong>One Person Company<\/strong><\/a> as Sole Proprietorship while they share huge dissimilarities.\u00a0 <br><br>A notable difference between an OPC and Sole Proprietorship is the nature of liabilities they carry. As an OPC is a separate legal entity from its Promoter\/shareholder, it has its own liabilities and assets. Thus, the Promoter is not liable to pay the debts of a One Person Company.<br><br>On the other hand, in <a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/swaritadvisors.com\/sole-proprietorship-registration\" target=\"_blank\"><strong>Sole Proprietorship<\/strong><\/a>, the Promoter does not differ from the business entity. Therefore, in case of non-compliance of repaying liabilities, the Promoter\u2019s assets are on stake. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligibility_to_convert_into_OPC\"><\/span>Eligibility to convert into OPC<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Any Private Limited Company that has a Paid-Up Share Capital\nof INR 50 Lakhs with its annual turnover not more than INR 2 Crores can convert\nin an OPC under following conditions: <\/p>\n\n\n\n<ul><li>First, the Private Limited Company needs to get an\napproval from the shareholders by passing Special Resolution in Extra-ordinary\nGeneral Meeting (EGM). Moreover, the Company is required to attain No Objection\nCertificate from the existing members and creditors before passing the Resolution.<\/li><li>The shareholder of the proposed OPC shall only be\na natural person with Indian citizenship.<\/li><li>Further, an OPC\u2019s shareholder must be a resident\nof India. Any individual becomes a resident if he stays for 180 days in India\nduring the preceding calendar year.<\/li><li>The Private Company must appoint a Nominee for\nproposed One Person Company through its Memorandum. It is essential to get the\nnominee\u2019s consent before appointing him or her.<\/li><li>A minor is not eligible to be a nominee or\nmember of a One Person Company. <\/li><li>The shareholder of the ensuing OPC must not have\nincorporated any other OPC or been a nominee of any other OPC.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_converting_into_a_One_Person_Company\"><\/span>Advantages of converting into a One Person Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>A Private Limited Company can leverage several benefits through conversion in an OPC. Let&#8217;s look at some of the significant advantages:<\/em><\/p>\n\n\n\n<ul><li><strong>Perpetual succession<\/strong>&#8211; Being a separate legal entity, an OPC sustains      irrespective of the death, insolvency of its stakeholder\/Director.<\/li><li><strong>Easier to File Annual Returns<\/strong>&#8211; The biggest perk of having a One Person Company is that there is less ROC and annual compliance. The Company&#8217;s Director can file the Annual Returns and eliminate the need for the approval of a Company&#8217;s Secretary.&nbsp;&nbsp;<\/li><li><strong>Swift decisions-&nbsp;<\/strong>When only one person is running a Company,&nbsp;it simplifies the decision-making process. OPC takes real-time decisions and makes the optimal utilization of resources.<\/li><li><strong>No Annual General Meeting required-<\/strong>&nbsp;The rules and regulations of a One Person Company are not stringent like a Private Limited Company. Therefore, there  is no mandatory requirement to conduct an Annual General Meeting.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prerequisites_of_Private_Limited_Company_to_OPC\"><\/span>Prerequisites of Private Limited Company to OPC<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>Companies Act, 2013 has set some guidelines and conditions for Private Limited Companies to convert into One Person Company. Here are the legal compliances to fulfill before converting in an OPC: <\/em><\/p>\n\n\n\n<ul><li>The applicant Company must ensure to prepare and audit its Balance Sheet, Profit &amp; Loss A\/c and books of Accounts.<\/li><li>The Private Limited Company must file all the ROC Returns prior to undertaking the conversion procedure. <\/li><li>A proof that the Company has paid Stamp Duty on the issue of Share Certificate. Therefore, Share Certificate should endorse the payment.<\/li><li>The Private Company must have filed appropriate TDS Returns for all TDS deductions.<\/li><li>Private Limited Company must file &amp; pay the returns for GST, VAT and Service Tax.\u00a0 <\/li><li>The company should have an updated register at its office that records the Minutes of the Meeting of shareholders &amp; Board.<\/li><li>Applicant Company must possess a Registration Certificate under Shops and Establishment Act of the concerned state to maintain the offices, warehouse, shops etc.\u00a0 <\/li><li>The Company should have complied with the provisions of Professional Tax. <\/li><li>If there are more than 20 employees in the Private Company, then it must register under PF. Similarly, it is compulsory to register with ESIC in case of more than 10 employees. The Private Limited Company must have filed the monthly returns under PF and ESIC. <\/li><li><strong><a href=\"https:\/\/swaritadvisors.com\/learning\/analysis-of-merger-and-acquisition\/&quot;\">Analysis of Merger and Acquisition<\/a><\/strong><\/li><li>Complete guide to winding up a Private Limited Company<\/li><li>A Comprehensive Guide to <strong><a href=\"https:\/\/swaritadvisors.com\/learning\/a-comprehensive-guide-to-draft-a-memorandum-of-understanding-agreement\">Draft a Memorandum of Understanding Agreement<\/a><\/strong><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_convert_a_Private_Limited_Company_to_OPC\"><\/span>How to convert a Private Limited Company to OPC?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Follow the steps given below for the conversion of Private Limited Company to a One Person Company:<\/p>\n\n\n\n<ul><li><strong>Summon a Board\nMeeting<\/strong>&#8211; The Company\u2019s Director should call a Board Meeting to decide upon\nthe conversion. The purpose of the meeting is to fix time, date and place to conduct\nthe Extra-Ordinary General Meeting of shareholders. Draft notice of EGM with\nits agenda and an Explanatory Statement. <\/li><\/ul>\n\n\n\n<div class=\"shadow6\" <b=\"\">Note- <em>The notice must be issued through a Special Resolution that shall be adopted by the shareholder in regards to the conversion of Private Limited to OPC.<\/em><\/div>\n\n\n\n<ul><li><strong>Issuance of Notice:<\/strong>&nbsp; After drafting\nthe Notice, issue it to all the Directors, shareholders, members and Auditors\nof the Company. The date of issue of Notice must be 21 days before the date of\nEGM.<\/li><\/ul>\n\n\n\n<ul><li><strong>NOC from the creditors: <\/strong>Before passing the Special Resolution, obtain the consent of creditors as No Objection Certificate. Besides, the consent has to be placed before EGM.<br> <\/li><li><strong>Hold the EGM<\/strong>:&nbsp;The EGM shall be conducted on the stipulated date, time and place. It is required to pass a Special Resolution which helps in the conversion of Private Limited Company into OPC.<\/li><\/ul>\n\n\n\n<ul><li><strong>File Form MGT-14:<\/strong>&nbsp;Companies Act, 2013 mandates to file Form MGT-14 with ROC for all the passed Special Resolutions within 30 days from its date of passing. Also, affix these documents with your Form:<ul><li>Altered MOA and AOA<\/li><li>Notice of EGM with Explanatory Statement<\/li><li>A certified copy of Special Resolution<\/li><li>A certified copy of Board Resolution (Optional)<\/li><\/ul><\/li><\/ul>\n\n\n\n<ul><li><strong>File Application of conversion:<\/strong>\u00a0Now <a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.mca.gov.in\/MCA21\/dca\/help\/instructionkit\/NCA\/Form_INC-6_help.pdf\" target=\"_blank\">file Form INC-6<\/a> for the conversion to ROC with the attachments mentioned below:<ul><li>An Affidavit\/Declaration by all the Directors which states the consent of each member and creditor for the conversion into an OPC. The Declaration must also ensure that the Company\u2019s Paid-Up Capital is less than INR 50 lakhs and has a turnover of less than INR 2 crores;<\/li><li>A Certificate issued by a practising Chartered Accountant that conforms to the above statement;<\/li><li>The latest audited reports of Profit &amp;Loss Account and Balance sheet of the Company;<\/li><li>No Objection Certificate\/ consent of all the creditors;<\/li><li>\u00a0A detailed list of all the members and Directors;<\/li><li>A copy of Board Resolution, Special Resolution, Agenda and Explanatory Statement;<\/li><li>Lastly, provide an altered copy of MOA and AOA which incorporates relevant clauses essential for OPC.<\/li><\/ul><\/li><\/ul>\n\n\n\n<ul><li><strong>ROC issues the Certificate of Conversion:<\/strong>&nbsp;After receiving an Application and documents, the concerned Registrar of Companies will scrutinize the provided information. If he finds the Application to be complete, he will issue a Certificate to effect of conversion from Private Limited Company into One Person Company.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"shadow4\">The conversion process of a Private Limited Company in an OPC is quite complex but beneficial. As there are lesser compliances and legal requirements to operate a One Person Company, it is prudent to convert in this business model.<br><br>If you seek legal assistance to get the documents prepared and file the conversion Application, contact Swarit Advisors. <\/div>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/difference-between-opc-and-private-limited-company\/\">10 Major differences between an OPC &#038; Private Limited Company\n","protected":false},"excerpt":{"rendered":"<p>A Private Limited Company tends to collapse when a Promoter or Co-founder withdraws from his position and resign the Company. In such a scenario, the best option is to convert the Private Limited Company into a One Person Company (OPC). Companies Act, 2013 enables the incorporation of OPC with a single shareholder; thereby, it provides [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":9347,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[60,193],"tags":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9302"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=9302"}],"version-history":[{"count":42,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9302\/revisions"}],"predecessor-version":[{"id":14867,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9302\/revisions\/14867"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/9347"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=9302"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=9302"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=9302"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}