What are the benefits for the Private Limited to OPC Conversion? Before learning about the Private Limited to OPC conversion, let us learn a little about both these corporate structures- Private Limited Company and One Person Company. A Private Limited Company is a privately held company where the business limits owner liability to its shares as well as caps the number of shareholders to 50. A Private Limited Company also restricts its shareholders from trading shares publicly. On the other hand, a One Person Company is an entity that a sole owner runs, but it comes with the added benefit of limited liability. The One Person Company or an OPC is a separate legal entity from its members. Therefore, it offers protection to its shareholders.
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Furthermore, each OPC must nominate a member for the Directorial position in case of the absence or demise of the current Director. He must also detail the nominee in the Company's Memorandum. In this article, we will learn about the benefits of converting a Private Limited to OPC company and the conversion procedure.
Advantages of Conversion of Private Limited to One Person Company The following are the advantages of conversion of Private Limited to OPC: ● An OPC is not liable to conduct board or general meetings. ● A One Person Company can attract investors otherwise not interested in Sole Proprietorship owning to its involved risks. ● Since OPC is similar to a Private Limited Company, it attracts more and better candidates to contribute to the country's growth. ● Only one Director runs a One Person Company. ● One Person Company is more manageable than a Private Limited Company. ● OPC protects its shareholders by limiting their liability and securing their personal assets. ● Transferring shares is an easy procedure in a One Person Company. You can fill out the share transfer form and transmit it to the shares' buyer.
What makes a Company eligible for Private Limited to OPC conversion? Before Private Limited Company to One Person Company conversion, the PLC must fit the following criteria: ● All of the Company's directors must give consent to the conversion. ● The applicant Company must reduce its net worth to the point where it can justify its OPC conversion. The capital must be significantly downgraded. ● The applicant Company must appoint a nominee to take charge of the OPC if the Director dies or leaves. ● The applicant company must have the approval of its creditors for OPC conversion. ● By submitting an affidavit, the PLC directors must relinquish their position so that the applicant's private Company converts into an OPC.
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Form Filling to convert Private Limited to OPC E-Form MGT 14 Filing The applicant company must file a copy of the Special Resolution with the RoC (Registrar of Companies) with the following attachments: ● EGM Notice: The applicant PLC must hold the Extra General Meeting to gain the approval of the Directors for the conversion ● Certified copy of Special Resolution ● Altered MoA Memorandum of Association ● Altered AoA Articles of Association (Certified copy of the Board Resolution is optional)
E-Form INC 6 Filing The applicant must also attach the following documents with the application for the conversion of a Private Limited Company to One Person Company: ● ● ● ●
Company Members and Creditors list Latest Audited Balance Sheet of the PLC NOC Letter from the Company Members and Creditors Letter of Consent from the Company Directors, submit it in an affidavit