Summary: The conversion of a Private Limited Company into a One Person Company (OPC) is a strategic move under the Companies Act, 2013, aimed at simplifying compliance and operational management. The process begins with a Board Meeting to obtain in-principle approval from the Directors, followed by securing shareholder consent through an Extraordinary General Meeting (EGM). Before passing the required special resolution, a No Objection Certificate (NOC) from existing members and creditors is mandatory. Post-EGM, the necessary forms, such as MGT-14 and INC-6, must be filed with the Registrar of Companies (ROC) along with supporting documents like altered MOA and AOA, NOCs, and financial statements. Once the ROC verifies the compliance, a new Certificate of Incorporation is issued, officially converting the company into an OPC. After conversion, the company must update its PAN, stationery, bank accounts, and inform relevant authorities about the status change. This structured approach ensures a smooth transition, adhering to legal requirements and minimizing business disruption.
SHORT SUMMARY:
This brief outline an attempt to unlock the intricacies of converting a private company into a one-person company as specified by the Companies Act, 2013. I feel that the approach for converting a private limited company into a one-person company described in this post would be useful for everyone.
The conversion of the Company’s status from private to OPC would become effective from the date of receipt of the Registrar’s approval, and the change of name would become effective upon the issuance of a new Certificate of Incorporation.
The Companies Act of 2013 was meant to simplify the regulations, however it instead added a lot of limitations on doing business. As a result, private companies are becoming one-person businesses.
A One Person Company is easier to administer and requires less compliance; converting a sole proprietorship, partnership, or private limited company to a one-person company would benefit the majority of people.
With the amendment made in rule 7 of Companies (Incorporation) Rules, 2014 vide (2nd Amendment) Rules, 2021, the provisions related to paid up capital and average annual turnover have been dispensed with.
√ Applicable Section(s)
Section 3 of companies Act,2013
√ Applicable Rule(s)
Rule 7 of companies (Incorporation) Rule, 2014
PROCEDURE/STEPS FOR CONVERSION OF PRIVATE COMPANY INTO ONE PERSON COMPANY:
| S. No. | STEPS | ACTION |
| 1. | BOARD MEETING | |
| Notice of Board Meeting | Issue Notice in accordance with the provisions of section 173(3) of the Companies Act, 2013 read with SS-1, for convening a meeting of the Board of Directors. | |
| 2. | Agenda of Meeting | To Get in-principal approval of Directors for Conversion of Private Company into One Person Company (OPC).
Fix date, time and place for holding Extra-ordinary General meeting (EGM) to get approval of shareholders, by way of Special Resolution, for Conversion of Private Company into One Person Company (OPC). To approve notice of EGM along with Explanatory Statement to be annexed to the notice of General Meeting as per section 102(1) of the Companies Act, 2013; To authorize the Director or Company Secretary to issue Notice of the Extra-ordinary General meeting (EGM) as approved by the board. |
| 3. | Important Note: | Before passing such special resolution, the Company shall obtain No Objection Certificate in writing from existing members and creditors. |
| 4. | Notice of General Meeting: | Provisions of the Section 101 of the Companies Act 2013 read with SS 2 provides for issue of notice of EGM in writing to below mentions at least 21 days before the actual date of the EGM :
> All the Directors. > Members > Auditors of Company |
| 5. | Convene General Meeting: |
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| 6. | ROC form filing | For conversion of private Company in OPC under section 18, few E-forms will be filed with concerned Registrar of Companies at different stages as per the details given below |
| 7. | E- Form MGT.14 | As per Section 117(3)
Copy of this special resolution is required to be filed with concerned ROC through filing of form MGT-14 within 30 days of passing Special Resolution in the EGM |
| 8. | ATTACHMENT:
i. Notice of EGM along with copy of explanatory statement under section 102; ii. Certified True copy of Special Resolution; iii. Altered memorandum of association; iv. Altered Articles of association v. Certified True copy of Board Resolution may be attached as an optional attachment. |
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| 9. | It is relevant to note that First you have to file form MGT-14 as SRN No. of form MGT.14 will be used in form INC.6 | |
| 10. | E- Form INC.6 | Accordingly, an application for conversion of a Private Company into a OPC is required to be filed in e-Form INC-6 to the ROC CPC, with all the necessary annexure and with prescribed fee. |
| 11. | ATTACHMENT:
i. The list of members and list of creditors. ii. The latest Audited Balance Sheet and the Profit and Loss Account; and iii. The copy of No Objection letter of secured creditors. iv. NOC of Members and Creditors. v. The directors of the Company shall give a declaration by way of affidavit duly sworn in confirming that all members and creditors of the Company have given their consent for conversion, the paid-up share capital Company is fifty lakhs rupees or less or average annual turnover is less than two crores rupees, as the case may be Other information if any can be provided as an optional attachment |
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| 12. | Duty of ROC:
Concerned Registrar of Companies (ROC) will check the E-forms and attached documents filed by the Company for Conversion of Private Company into One Person Company (OPC). On being satisfied that Company has complied with prescribed requirements the Registrar shall issue the Certificate to the effect of Conversion of Private Company into One Person Company (OPC). |
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| POST CONVERSION REQUIREMETNS | |
| 1. | Arrange new PAN No. of the Company |
| 2. | Arrange new stationary with new name of the Company |
| 3. | Update Company bank account details |
| 4. | Intimate all the concerned authorities like Excise and sales tax etc about the status change |
| 5. | Printed copy of new MOA & AOA. |
BOARD RESOLUTION
(to consider and approve conversion of private company into OPC)
“RESOLVED THAT pursuant to the provisions of sections 3, 18 and 122 and any other applicable provisions, if any of the Companies Act, 2013, read with rule 7 of the Companies (Incorporation) Rules, 2014, and subject to the consent of the members of the company, the consent of the Board be and is hereby accorded for the conversion of Private company into One person Company and consequently the name of the Company be and is hereby changed from “. Pvt Ltd” to “.
RESOLVED FURTHER THAT an Extra ordinary General Meeting of the company be called and held at ………on…….at…….as per the draft notice placed before the meeting duly initialed by the Chairperson for identification.
RESOLVED FURTHER THAT MS/Mr (director) of the company be and is hereby authorized to file necessary documents/forms with the Registrar and to do all such acts, deeds, matters and things as may be deemed necessary for the purpose of giving effect this resolution and for matters connected therewith or incidental thereto.
SPECIAL RESOLUTION
(for conversion of private company into one person company)
“RESOLVED THAT pursuant to the provisions of sections 3, 18 and 122 and other applicable provisions, if any, of the Companies Act, 2013, read with rule 7 of Companies (Incorporation) Rules, 2014, the consent of the members/creditors be and is hereby accorded to the conversion of this Private Limited Company into a One Person company and consequently the name of the Company be and is hereby changed from “……..” to
RESOLVED FURTHER THAT the word “Private” wherever appearing in the memorandum and articles of association of the company in the name of the company be and is hereby deleted.
RESOLVED FURTHER THAT Mr. Director of the Company be and is hereby authorized on behalf of the company, to do all such acts, deeds, matters and things as deemed necessary, proper or desirable and to sign and execute all necessary documents, application and returns for the purpose of giving effect to the aforesaid resolution.
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Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at [email protected]).
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