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Convert Private Limited Company to One Person Company

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Private Limited Company to One Person Company

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Convert Private Limited Company to One Person Company

A private limited company or famously known as LTD is a privately held company. This implies that the business limits owner liability to its shares and limits number of shareholders to 50. It also restricts shareholders from trading shares publicly.

One Person Company is a business entity run by a sole owner with the benefit of limited liability.One Person Company is a separate legal entity from its members, offering protection to its shareholders. Every One Person Company must nominate a member for the Directorial position in the MOA/AOA, in case of absence of the prime Director.

Advantages of One Person Company (Heading)

  • Similar to Private Limited Company and unlike Sole Proprietorship, OPC allows limited liabilities.
  • One Person Company is not liable to conduct board meeting or general meetings.
  • One Person Company can attract keen investors who are not interested in Sole Proprietorship owning to the risks it entails.
  • As One Person Company is similar to Private Limited Company; it attracts quality candidates to help in the growth of the Company.
  • Only one Director is required to form the One Person Company.
  • One Person Company is more easily managed as compared to Private Limited Company.
  • Unlike Sole Proprietorship, it provides protection to its shareholders by limiting liability from personal assets.
  • Transferring of shares is easily done in One Person Company, by simply filling the share transfer form and handing over to the buyer of the shares.

 

Documents required to convert Private Limited Company to One Person Company

1. E-Form MGT 14 – Copy of the Special Resolution is needed to be filed with Registrar of Companies with the following attachments:

  • Notice of Extra General Meeting (EGM), which is held to gain the approval of Directors for the conversion of the Private Limited Company to One Person Company.
  • Certified true copy of Special Resolution
  • Altered Memorandum of Association
  • Altered Articles of Association
  • Certified true copy of Board Resolution is optional

2. E-Form INC 6 – Application for the conversion of Private Limited Company to One Person Company with the following necessary attachments:

  • List of all members and creditors
  • Latest balance sheet
  • Letter of ‘No Objection’ from the members and creditors
  • Letter of Consent from the Directors by way of affidavit

Frequently Asked Question

Can an OPC be converted into any other Company?
One Person Company cannot be converted to 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 a period of six months.
Can a Private Limited Company convert itself into a 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 a Private Limited Company is converted to 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

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