According to the Companies Act, of 2013, there is a mechanism for the conversion of a private limited company into an OPC (One Person Company), which provides for the conversion of one company class into another. Starting from 1 April 2014, section 18 of the Act explicitly allows a private limited company already registered to convert to an OPC (One Person Company).
Despite the fact that the company’s responsibilities and contractual obligations are unchanged by the conversion from PE to OPC, such claims, liabilities, and obligations of the company before the conversion will remain intact, and they will be enforced by the law, and the resultant OPC will be responsible for them in accordance with the law.
PLC to OPC conversion checklist
For a private limited company to be converted into a one-person business, the following requirements must be met:
- There should have been proper preparation of the company’s accounts and balance sheets.
- The company has filed all ROC (Registration of Companies) returns.
- The company’s share certificates are verified with the stamp duty payment and the stamp duty payment is matched up properly with the share certificates.
- All TDS (Tax Deducted at Source) has been deducted from the company’s sales and returns have been filed.
- Taxes have been paid and returns filed before converting, including value-added tax, or VAT.
- As far as the company’s registered office and employees are concerned, it complies with all tax obligations required by the state where it has its registered office.
- As long as the company lists monthly returns and pays dues in accordance with PF and ESIC, the company is registered with PF and ESIC.
The following provisions allow a private limited company to become a one person company:
- We provide less than 50 lakhs as capital for the company.
- A company should have a turnover of less than 2 crores of rupees throughout the last three fiscal years. If a company is new and hasn’t completed three years, its turnover will be calculated from the day the company was incorporated.
change a private limited business to a one-person company
Hold a meeting of the board
- In order to schedule an extraordinary general meeting (EGM) of the shareholders of the company, the directors of the company must meet and decide on a date that will be used for the meeting.
- A member of the board must draft a notice to shareholders along with a draft resolution, which must be passed by the shareholders in the form of a special resolution regarding the conversion of private companies to public companies.
EGM notice to be issued
- In order to be eligible to vote at the EGM, it is expected that all members, directors, and auditors of the corporation receive notice 21 days before the meeting.
- Additionally, an informative statement should be included with the notice and agenda as a special resolution.
All creditors have not objected
- It is necessary to obtain the No Objection Certificate (NOC) from all creditors of the company before the date of the EGM.
- In order to convene the EGM, creditors must submit a copy of their approvals.
Organizing the EGM
- On the day, time, and place stated in the notice, the EGM must be held. The EGM may approve altered MOAs (Memorandums of Agreements) and AOAs (Articles of Association).
Click Here: Conversion of Private Limited Company to OPC
The ROC receives the resolution and files it
- ROCs must receive Form No MGT-14 along with directed attachments within 30 days of the approaching date for all resolutions declared as special resolutions under the Companies Act 2013.
- A resolution is recorded on the ROC’s record as soon as it is endorsed by the MGT-14.
Certificates of conversion are issued
- An application for conversion to a one-person company is approved by the Registrar of Companies having jurisdiction upon acceptance of the application.