Introduction
In the dynamic landscape of business, adaptation and evolution are key to survival and growth. The Companies Act 2013 introduced the concept of One Person Company (OPC), offering a streamlined approach for individuals to establish their own companies with minimal compliance burdens. This article delves into the intricate process of converting a Private Limited Company into an OPC, elucidating the legal provisions, procedural intricacies, and post-conversion requirements.
Understanding Private Limited Company and One Person Company
Before delving into the conversion process, it’s imperative to comprehend the distinctions between a Private Limited Company and an OPC. A Private Limited Company, as defined under Section 2(68) of the Companies Act 2013, is characterized by limited liability, restricted share transferability, and a maximum membership cap of 200 individuals. Conversely, an OPC, outlined in Section 2(62) of the Act, enables a single individual to establish a company, enjoying reduced compliance obligations compared to other corporate structures.
Legal Framework for Conversion
The conversion of a Private Company into an OPC is governed by Section 18 of the Companies Act 2013 and Rule 7 of the Companies (Incorporation) Rules 2014. These provisions delineate the regulatory framework and procedural requisites for effectuating the conversion, ensuring adherence to statutory norms and safeguarding stakeholders’ interests.
Conditions for Conversion
The conversion process is contingent upon fulfilling specified criteria:
Shareholder’s Nationality and Residential Status: The shareholder must be an Indian citizen and a resident of India, as per regulatory stipulations.
Ownership Limit: The shareholder should not concurrently hold ownership in another OPC or be a member of any other OPC.
Exclusion of Minors: Minors are ineligible to participate as members in an OPC, aligning with legal constraints.
Stepwise Procedure for Conversion
Step 1: Convene a Board Meeting
Purpose: Call a Board Meeting to discuss and approve the conversion of the Private Company into an OPC.
Agenda Items:
- Approval of Conversion of Private Company into OPC
- Fixing the date, time, and place for holding Extra-ordinary General Meeting (EGM) to obtain shareholders’ approval through a Special Resolution for the conversion.
- Approval of the notice of EGM along with Agenda and Explanatory Statement.
- Authorization to issue the Notice of EGM.
Documents Required:
- Notice of Calling of Board Meeting
- Board Minutes
Step 2: Obtain Approval from Members and Creditors
Requirement: Obtain a No Objection Certificate (NOC) in writing from existing members and creditors before passing the special resolution.
Documents Required:
- No Objection Certificate
Step 3: Pass Special Resolution (SR)
Conduct EGM: Convene an Extraordinary General Meeting (EGM) and pass a Special Resolution for:
- Conversion of Private Company into OPC
- Approval of Alteration in Memorandum of Association (MOA) and Articles of Association (AOA).
Documents Required:
- Minutes of EGM
- Certified True copy of Special Resolution
Step 4: Filing of E-forms
File MGT-14 with RoC: Within 30 days from the date of EGM, file Form MGT-14 with the Registrar of Companies (RoC).
Documents Required:
- Notice of EGM along with copy of explanatory statement
- Certified True copy of Special Resolution
- Altered memorandum of association
- Altered articles of association
- Certified True copy of Board Resolution (optional attachment)
File E-Form INC 6: Within 30 days from the date of EGM, file Form INC 6 for the conversion process with RoC, accompanied by necessary annexures and prescribed fee.
Documents Required:
- List of members and list of creditors
- Latest Audited Balance Sheet and the Profit and Loss Account
- Copy of No Objection letter of secured creditors
- NOC of Members and Creditors
- Declaration by way of affidavit duly sworn in by the directors confirming compliance
Conclusion
In navigating the intricate terrain of corporate restructuring, converting a Private Limited Company into an OPC offers a strategic avenue for optimizing operational efficiency and regulatory compliance. By meticulously adhering to legal provisions, procedural protocols, and post-conversion imperatives, businesses can seamlessly transition into the OPC paradigm, unlocking a realm of opportunities for entrepreneurial growth and innovation.
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