Why must you convert your Pvt Ltd Company into an OPC?

• Home
• /
• Knowledge Base
• /
• Business Registrations
• /
• Convert Private Limited Company to One Person Company
• /
• Why must you convert your Pvt Ltd Company into an OPC?

Why must you convert your Pvt Ltd Company into an OPC?

Before learning about converting a Pvt Ltd Company into an OPC or One Person Company, let us learn about these company structures. A Private Limited Company is a registered corporate structure model with limited liability features, separate legal identity, and share transferability among company members.

This private affair of shares transition among the exclusive company members has termed the Company private. But, sometimes, the scope of the Company becomes concise with the advent of new industrial advancements or for other personal reasons. Such Companies can then alter their structure to a smaller version to concise their engagement in the market. 

For such purposes, we have a One Person Company model in India. An OPC or a One Person Company is a company model in which you have a sole director/stake owner to drive the Company in the market. Such a model features every feature of a limited company in India. As a One Person Company, much has been detailed on the requisite service page. Here, we enlist some benefits of converting your Private Limited Company into a One Person Company.

Why opt for Private Limited to OPC conversion?

There are several reasons for Private Limited Company owners as well as stakeholders to consider converting to a One Person Company model. Some of them are detailed below for your reference. 

Sole Ownership in Private to OPC Conversion

OPC is a registered Company model that can be owned and managed by a single director. In the case of a PLC where the owner is the sole shareholder as well as the director, they can conveniently convert into an OPC. Such a move will simplify the ownership structure and reduce the lengthy compliance requirements.

Less formality for filing Legal Compliance in case of an OPC

The One Person Company is required to submit far fewer compliances than PLCs to the MCA. For instance, the MCA does not mandate an OPC for any of the following:

• Hold an Annual General Meeting (AGM) 
• Maintain Records of shareholder meetings

Both are compliance cases of a Private Limited Company, which makes it all the more beneficial to convert a Pvt Ltd Company into an OPC.

OPC has lesser operational cost than PLCs

An OPC, in comparison to a Private Limited Company, has low compliance as well as administrative costs. This helps the business save money for running operations.

OPC enjoys certain regulatory exemptions as per the MCA directives

Every OPC is exempted from certain provisions as per the Companies Act of 2013, such as the following:

• No requirement to have a minimum paid-up capital
• No requirement to appoint an Independent Director

OPC structures make Management Easier

An OPC is relatively easier to manage than a PLC because it poses far lesser compliance requirements. Also, an OPC needs to maintain only a few stakeholders. Therefore, businesses with reduced reach and capability can convert into an OPC model as a more convenient option with a single owner at its pivot.

Note: If you decide to convert your Pvt.Ltd to an OPC, then you must carefully consider your needs and circumstances as a Company owner. We recommend seeking the legal advice of an Incorporation Professional before making such instrumental changes to your business structure. 

• 1081 views

Blog Search