A demand for turning a private limited company into a one-person company may arise due to a co-founder or promoter leaving a private limited company. The procedure for converting a private limited company into an OPC is detailed in this article.
Conditions for a Conversion of Private Limited Company to OPC
- A natural person should be a member of the new OPC
- A citizen of India, or someone who has spent 120 days in India in the previous financial year, should be a member of the new OPC
- The OPC member should not be a member of another OPC or a nominee for another OPC
- A minor is not permitted to join or be a part of OPC
- The company that will be converted into an OPC should not be set up as a Section 8 company.
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Procedure for Conversion of Private Company Into OPC
The following is the procedure for converting a private company into an OPC:
- Call for a board meeting
- Hold board meeting
- Call for EGM
- NOC from creditors
- Hold EGM
- Form filing to RoC
- Issue of share certificate
1. Call for Board Meeting
The notice for the board meeting should be sent to all members at least 7 days prior to the meeting date. In the notice, the agenda for the board meeting should be specified.
2. Hold Board Meeting
The board of directors should meet for the following reasons:
- The board of directors must approve the conversion of a Private Limited Company into an OPC
- The extraordinary general meeting’s date, location, time, and day will be decided
- For the approval of the EGM notice, agenda, and explanatory statement
- To authorise any of the directors to issue the approved notice of the EGM.
3. Call for EGM
All members, directors, and auditors of the company shall be notified of the extraordinary general meeting (EGM). The EGM notice should be sent at least 21 days prior to the EGM date.
4. NOC from Creditors
Before passing the special resolution in the EGM, the company should get a no-objection certificate (NOC) from the existing shareholders and creditors. The no-objection certificate (NOC) should be in writing.
5. Hold EGM
The EGM will be held for the following reasons:
- Check to see if the meeting has a quorum.
- Check for the presence of the company’s auditor. If not present, check if a leave of absence is granted or not as per Section 146 of the Companies Act, 2013.
6. Form Filing to RoC
Certain e-Forms must be completed with the concerned registrar of companies (RoC) for the conversion of a private company into a one person company (OPC). The following forms must be filed with the authorised registrar:
Form MGT-14 should be filed with the RoC once the EGM passes the special resolution. Within 30 days of the special resolution’s passing, Form MGT-14 should be filed with RoC. The Form MGT-14 should be accompanied by the following attachments:
- The EGM notice, along with a copy of the explanatory statement
- A true certified copy of the special resolution
- The company’s amended Memorandum of Association (MoA) and Articles of Association (AoA)
- A true certified copy of the board resolution.
The application for the conversion of private company into OPC should be filed to the RoC. Form INC-6 must be filed to submit the application, together with the relevant attachments:
- The complete list of creditors and members
- The company’s most recent balance sheet
- A copy of the letter of no objection
- Affidavit of the directors of the company declaring that all creditors and shareholders have consented to the conversion of a private company into an OPC, that the company’s paid-up capital is less than ₹50 lakh, and that the private company’s turnover is less than ₹2 crores.
7. Issue of Share Certificate
For the conversion of a private company into an OPC, the registrar of companies will review all e-Forms submitted and all attached documents filed by the private company. The RoC should issue a share certificate for the conversion of a private company into an OPC after the registrar of companies is satisfied that the Private Company has met the statutory requirements.
Convet Pvt to OPC now!
When compared to a private company, a one-person company (OPC) can be readily managed with far less compliances to follow. The conversion of a private company into an OPC will benefit the majority of the company’s employees. Converting a private company to an OPC is a difficult and time-consuming process. We have skilled experts at Vakilsearch who can help you with the process of converting a private company to an OPC. Our experts will assist you and ensure that your task is completed successfully.
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