In recent years, the concept of One Person Company (OPC) has gained significant popularity among entrepreneurs and small business owners. An OPC is a unique form of business structure that allows a single individual to operate and manage a company with limited liability. If you currently own a Private Limited Company (PLC) and wish to convert it into an OPC, there are certain steps and considerations you need to keep in mind.
The first step in the conversion process is to review the provisions of the Companies Act, 2013, which governs the formation and operation of OPCs in India. According to the Act, a PLC can be converted into an OPC if it meets certain criteria. One of the key requirements is that the company should have a paid-up share capital of less than or equal to Rs. 50 lakhs and an average annual turnover of less than or equal to Rs. 2 crores in the preceding three financial years.
Once you have confirmed that your PLC fulfills the eligibility criteria, you can proceed with the conversion process. Here are the essential steps involved:
- Obtain Director Identification Number (DIN): If you are the sole director of the PLC, you may already have a DIN. However, if there are other directors, you will need to apply for a new DIN for yourself as the proposed director of the OPC.
- Obtain Digital Signature Certificate (DSC): A DSC is required for filing electronic forms with the Ministry of Corporate Affairs (MCA). You can obtain a DSC from certified authorities.
- Conduct Board Meeting: Call for a board meeting of the PLC to propose the conversion into an OPC. Pass a resolution approving the conversion and authorize a director to make necessary filings with the MCA.
- Obtain Consent: Obtain written consent from all shareholders, creditors, and other stakeholders for the proposed conversion. This consent should be in the form of a special resolution.
- File Form INC-6: Prepare and file Form INC-6 with the Registrar of Companies (ROC) along with the required documents, such as the memorandum of association, articles of association, and consent letters. This form serves as an application for the conversion of the PLC into an OPC.
- Pay Fees and Obtain Certificate of Incorporation: Pay the requisite fees to the ROC and submit the necessary documents. Once the ROC is satisfied with the application, they will issue a Certificate of Incorporation, indicating the conversion of the PLC into an OPC.
- Make Necessary Changes: After obtaining the Certificate of Incorporation, make the necessary changes to the company’s name, letterheads, stationery, and other official documents to reflect the new OPC status.
It’s important to note that after conversion, the OPC must comply with certain regulations applicable to OPCs, such as mentioning “One Person Company” in its name and appointing a nominee who will become the owner of the OPC in case of the director’s death or incapacity.
conversion of private limited company to opc can offer several advantages, including limited liability, ease of management, and flexibility in decision-making. However, it is advisable to consult with a professional, such as a company secretary or chartered accountant, to ensure compliance with all legal requirements and smooth transition of your business structure.