PRIVATE LIMITED TO ONE PERSON COMPANY IN INDIA 2022
The conversion of a Private limited company into a One Person Company in India is done as per the Companies Act, 2013, which gives a method to convert one class of company into another. Section 18 of the Act explicitly grants the conversion of an already registered Private limited company starting from 1 April 2014. The conversion of PLC to OPC 2022 will not affect the responsibilities, contractual obligations, claims, liabilities, obligations of the company that were in existence before the conversion. All these will stand to be enforceable by law, and the resulting One Person Company shall be liable for them.
BENEFITS OF CONVERSION FROM PLC TO OPC
- IT LIMITS A DIRECTOR’S LIABILITY: A company often needs to borrow money to conduct business. In the case of a sole proprietorship, the proprietor is personally liable for all the debt. If this debt can’t be repaid by the sole proprietorship firm, the proprietor may have to sell his or her house/jewellery/car etc to pay the debt. In a One Person Company (OPC), only the amount invested to start the business will be lost. The businessman’s personal property will be safeguarded from any company debt.
- PERPETUAL EXISTENCE: If a businessman/businesswoman was to operate as a sole proprietorship, rather than an OPC, the business would come to an end with his or her death. Since an OPC exists as a separate legal identity, it passes on to the nominee director and, therefore, continue to exist perpetually.
- FEWER COMPLIANCES: An OPC has only one director and one shareholder, so annual filings are limited to share certificates and statutory registers.
REQUIREMENTS FOR THE CONVERSION OF PLC TO OPC
- The company should have prepared its books of accounts and balance sheet
- The company has listed and filed all the Registrar of Companies (ROC) returns
- The company has paid requisite on the result of the share certificate. The share certificates properly match the payment of stamp duty
- The company has deducted all Tax Deducted at Source (TDS), and has filed all the TDS returns
- The company has paid VAT/Service Tax/GST, and filed the returns before starting this conversion
- The company has to maintain a record of minutes of the meeting, for its board and shareholders. They must keep updated registers at its registered office
- The company must be registered under the Shop and Establishment Acts as per the applicable state laws
- The company must comply with the requirements of the professional tax, if it is applicable in the state where the registered office of the company is located, and the states in where it has employees
- The company must be registered under PF, if the number of employees is more than 20 and with the Employees State Insurance Corporation (ESIC), if the number of employees is more than 10, and if its listing monthly returns and paying dues, as expected under PF and ESIC
- The provided capital of the private limited company is less than INR 50 lakhs
- The annual turnover of the private limited company must be less than INR 2 crores during the past three progressive financial years. Also, if the company is new, and has not completed three years, then the turnover will be considered from the date of its incorporation
- The shareholder of the resulting OPC will be only one individual of Indian nationality
- The shareholder of the OPC must be an individual residing in India for 180 days of one calendar year
- The shareholder of the resulting One Person Company should not have incorporated any other OPC, or he or she is not a candidate of any other One Person Company
- A minor cannot be a member or part of an OPC.
CONVERSION OF A PRIVATE LIMITED COMPANY TO A ONE-PERSON COMPANY
- GATHER A BOARD MEETING: The directors of the company have to meet and decide on a date to call for a meeting of the shareholders. This is also known as an Extraordinary General Meeting (EGM). This notice must be drafted to shareholders along with the draft resolution. This has to be passed as a special resolution which is to be adopted by the shareholders, in regard to the conversion of a Private Limited Company to OPC
- ISSUE NOTICE OF EGM: The notice of EGM must be sent to all the members, directors and auditors of the company. The date of issue of the notice has to be 21 days before the date of EGM. Simultaneously, along with the notice and the agenda, the draft resolution has to be given as a special resolution. An informative statement must be included.
- NO OBJECTION FORM ALL CREDITORS: Before the date of EGM, the No Objection Certificate (NOC) from all the creditors of the company has to be obtained. A copy of the approval from creditors has to be settled before the EGM
- CONDUCT OF EGM: The EGM has to conducted as per the notice, on the assigned date, time and place. The EGM can pass a special resolution in regard to the approval of altered MOA (Memorandum of Association) and AOA (Articles of association)
- FILING OF RESOLUTION WITH THE ROC: As per Companies Act, 2013 all resolutions declared as a special resolution by the members should be registered with the ROC in Form No MGT-14, along with directed attachments within 30 days from the approaching date. After MGT-14 has been endorsed, the ROC records the resolution in its records
- THE ISSUE OF THE CERTIFICATE OF CONVERSION: On acceptance of the application for conversion, the Registrar of Companies that has jurisdiction examines the application. If it completed and approved, the ROC issues a certificate of Private Limited company into One Person Company.
APPLICATION FOR CONVERSION
The application of the conversion of private limited company into a one-person company is done using Form-INC-6 with the below mentioned statements:
- A declaration of the form with an affidavit by all the directors of the Private Limited Company, which states that all members and creditors of the company, have given their permission to the conversion of the said company into an OPC.
- The paid-up capital of the Private Limited Company is less than INR 50 lakhs and the turnover is less than INR 2 crores
- Affidavits have to be given by all the members which confirm the paid-up capital is less than INR 50 lakhs, and the average turnover is less than two crores in the past three consecutive financial years
- A certificate from a practising Chartered Accountant to confirm that the paid-up capital of the company is less than INR 50 lakhs and the turnover is less than two crores
- The latest audited profit and loss account and balance sheet of the Private Limited Company
- A No Objection Certificate from all creditors of the Private Limited Company
- List of members and directors of the Private Limited Company
- The copy of the board resolution and the specific resolution taken at the EGM, along with all the notices, agenda, and informative statement
- A modified copy of MOA and AOA, which includes all the related clauses, needed for OPC.
Once you get in touch with us at ACE ALLIANCE with your request to create covert your Private Limited to One Person Company we will start the process. After our team receives all the details, our expert team of lawyers and attorney will create your Private Limited to One Person Company agreement and send it across for your reference within 2- 3 business days. The price you pay for these services will include three rounds of iterations. Therefore, if you need any changes done to Private Limited to One Person Company agreement, our team of lawyers at ACE ALLIANCE will do the needful and help you with the complete registration process.