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The conversion of PLC (Private limited company) into an OPC (One Person Company) is provided as per the Companies Act, 2013, which implements a mechanism 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 Private Company into OPC would not affect the responsibilities and contractual obligations of the company before conversion, and such claims, liabilities, obligations shall be enforceable by law, and the resulting OPC shall be liable for them.
Here are some requirements to be followed to convert the private limited company into a one-person company:
The company should have suitably prepared its books of accounts as well as its balance sheet.
The company has listed and filed all ROC (Registrar of Companies) returns.
To examine whether the company has paid requisite on the result of the share certificate and that the share certificates are properly matched with the payment of stamp duty.
The company has deducted all TDS (Tax Deducted at Source) and filed relevant TDS returns.
The company has paid VAT and Service Tax, or GST, and filed suitable returns before initiating the conversion.
To check whether the company is maintaining a record of minutes of the meeting, for its board and shareholders, and keep updated registers at its registered office.
The company is registered under the shop and the establishment acts as per the applicable state laws, where they control offices, shops, warehouses, etc.
The company complies with the requirements of the professional tax, if applicable in the state where the registered office of the company is located and the states in which it has employees.
The company is registered under PF, if the number of employees is more than 20 and with ESIC (Employees State Insurance Corporation), if the number of employees is more than 10, and if its listing monthly returns and paying dues as expected under PF and ESIC.
A private limited company can be changed into the one-person company based on the following provisions:
The provided capital of the company is less than Rs. 50 lakhs.
The annual turn over of the company should be less than Rs. 2 crores during the past three progressive financial years. Additionally, if the company is new, and has not completed three years, then the turnover shall be considered from the date of its incorporation.
The shareholder of the resulting OPC shall be only one individual of Indian nationality.
The shareholder of the OPC is a person residing in India for 180 days of one calendar year.
The shareholder of the resulting OPC must not have incorporated any other OPC, or he/she is not a candidate of any other OPC.
A minor cannot be a member or part of an OPC.
The Form MGT-14 should be accompanied by the following attachments:
The Form INC-6 should be accompanied by the following attachments:
The application of the conversion of private limited company into a one-person company is filed using Form-INC-6 with the following statements.
A declaration of the form with an affidavit by all the directors that all members and creditors of the company have given consent to the conversion of company into an OPC, and that the paid-up capital of the company is less than Rs. 50 lakhs and that the turnover is less than Rs. 2 crores.
Affidavits from the members confirming the paid-up capital is less than Rs. 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 Rs. 50 lakhs and the turnover is less than two crores.
The latest audited profit and loss account and balance sheet of the company.
No Objection Certificate from all creditors.
List of members and directors of the company.
Copy of the board resolution and the specific resolution taken at the EGM, along with its notices, agenda, and informative statement.
A modified copy of MOA and AOA, including related clauses, required for OPC.
Arrange for a new OPC PAN card
Arrange for new stationery having the OPC’s name
Change the company’s bank account information
Inform the appropriate authorities, such as GST, the Income Tax Department, etc., of the status change
Make a copy of the revised MOA and AOA.
Answered by our experts
A director’s salary.
Issuing dividend payments from available profits. Taking money out of a limited company, as a director’s loan.
Claiming expenses for business-related items.
A limited liability company is a very tax-efficient business structure because limited companies pay corporation tax on their profits, of a flat rate of 19%. Directors can then minimize their personal tax and national insurance contributions by paying themselves a mixture of salary and dividends.
Shareholders are the owners of a public limited company, but they elect a board of directors who manage and make decisions on behalf of the business.
A public limited company has several obligations to fulfill, including
Annual General Meeting:
Board Meetings:
Shareholder Meetings:
Financial Reporting:
Corporate Governance:
Alteration of name is not mandatory while converting a private limited company to a public limited company. The company can choose to retain its existing name or change it as per its preference. However, if the company decides to change its name, it must comply with the applicable rules and regulations related to the change of name, such as obtaining the necessary approvals and filing the required forms with the Registrar of Companies.