In recent years, the concept of One Person Company (OPC) has gained significant popularity as a suitable business structure for individuals who wish to start a business on their own. An OPC provides the advantages of limited liability and separate legal entity status, similar to a private company, while allowing a single person to own and manage the business. For entrepreneurs looking to convert their existing private company into an OPC, there are certain procedures and requirements to be fulfilled. This article explores the process of converting a private company into an OPC in detail.
To begin the conversion process, the director of the private company must first assess whether they meet the eligibility criteria for an OPC. According to the Companies Act, 2013, an OPC can be formed only by an individual who is a resident of India and is not a nominee or member of more than one OPC. Therefore, if the director satisfies these criteria, they can proceed with the conversion process.
The next step involves obtaining a Director Identification Number (DIN) and a Digital Signature Certificate (DSC) for the director, if they haven’t done so already. These are essential for filing the necessary documents with the Registrar of Companies (ROC) during the conversion process. Once the DIN and DSC are obtained, the director can proceed with the conversion by following the steps outlined below.
- Hold a Board Meeting: The director must convene a board meeting to propose and pass a resolution for the conversion of the private company into an OPC. The resolution should be approved by the majority of the directors present at the meeting.
- Obtain Consent: The director must obtain the written consent of all members, creditors, and other stakeholders of the private company for the conversion. This consent should be obtained through a special resolution passed at a general meeting of the company.
- File Form INC-6: After obtaining the necessary consents, the director needs to file Form INC-6 with the ROC. This form serves as an application for the conversion of the private company into an OPC. The form must be accompanied by the required documents, such as the board resolution, special resolution, and a copy of the company’s latest financial statements.
- Issue New OPC Certificate: Upon receipt and verification of the Form INC-6, the ROC will issue a new Certificate of Incorporation to the private company, indicating its conversion into an OPC. From this point forward, the company will be considered an OPC, and the director will have to comply with the regulations applicable to OPCs.
- Make necessary changes: After the conversion, the director must make the necessary changes to the company’s legal documents, such as the Memorandum of Association and Articles of Association, to reflect the new structure as an OPC. These changes should be filed with the ROC within a specified time frame.
- Update PAN and GST registration: The director should update the company’s PAN (Permanent Account Number) and GST (Goods and Services Tax) registration details to reflect the conversion. This ensures compliance with tax regulations and smooth business operations.
Converting a private company into an OPC provides several benefits, including limited liability protection, ease of compliance, and simplified management structure. However, it is essential to understand the legal requirements and procedures involved in the conversion process. Engaging the services of a professional, such as a company secretary or chartered accountant, can ensure the conversion is done smoothly and in compliance with the applicable laws and regulations.
In conclusion, the Conversion of Private Company into OPC offers entrepreneurs the opportunity to enjoy the advantages of limited liability and separate legal entity status while operating their business as a single person. By following the prescribed procedures and fulfilling the necessary requirements, entrepreneurs can successfully convert their private company into an OPC and embark on their entrepreneurial journey with confidence