Private Limited Company to One Person Company

Private companies can convert to One Person Company by Rule 7 of companies’ incorporation rules, 2014. Given in Sec18 of Companies Act, 2013 a resolution is passed in general board meeting and form MGT-14 along with INC-6 is filled to apply for this conversion.

Why One Person Company?

A One Person company can be easily managed with less compliance as only a single member is responsible for conducting the business of the company. OPC has more benefits than a private company hence any private company dealing with all sorts of businesses is applicable to convert itself to an OPC with the rules and provisions given in Section 18 of the Indian Companies Act of 2013, and the Companies (Incorporation) Rules of 2014 [CR-2014]

Eligibility Criteria for Converting to One Person Company

Legal Provisions related to Conversion of Private Company into One Person Company are given in Section 18 the Companies Act, 2013 read with Rule 7 of Companies (Incorporation) Rules, 2014.

  • Only one shareholder or director is needed. They both can be the same person but they shouldn’t be a minor
  • The director should be a resident of India and has stayed in India for a period of not less than 182 days during the immediately preceding  calendar year
  • Director must have DIN and DSC.
  • The director needs to appoint a nominee who should also be a resident of India.
  • The share capital of the company must not exceed 50 lacks and the annual turnover needs to be less than two crores.

Detailed Procedure for Converting Private Company into One Person Company

Step - 1: BOARD MEETING

A notice is issued per the provisions of section 173(3) of Companies Act 2013 to summon a board meeting to discuss the conversion of the company. In the meeting principal approval of all directors is taken into consideration and date, time and venue are decided to hold an extraordinary general meeting (EGM) to take approval of all the shareholders by special resolution by Rule 7 of Companies (incorporation) Rules, 2014.

Step - 2: ISSUE OF NO OBJECTION CERTIFICATE

The Company shall obtain a NOC (NO OBJECTION CERTIFICATE) in writing from existing members when passing a special resolution in the general meeting. A copy of the consent of the creditors is placed before the EGM.

Step - 3: NOTICE OF EXTRAORDINARY GENERAL MEETING

In accordance with the provision of section 101 of Companies Act 2013 a notice of EGM is issued to all the directors, members and auditors of the company. The date of issue of notice must be in writing and to be issued 21 days before the date of EGM.

Step - 4: PROSECUTION OF EGM

EGM must be conducted on a given date and time as per the notice. All the members including shareholder, directors and auditors must be present. Check if the auditor is present if not, check the Leave of Absence is granted or not under Sec 146. In the meeting, a special resolution is passed for the approval of altered MOA (memorandum of association) and AOA (article of association) and conversion of the company

NOTE: Special resolution can be passed by a minimum of 75% of members present who are eligible to vote.

Step - 5: ROC FORM FILING

E-Form required to be filed for Conversion of Private Limited Company into OPC:

Form MGT-14 for Alteration of MOA and AOA

As per Sec. 117(3) the special resolution passed must be filed with ROC in form no. MGT-14 along with prescribed attachments and a govt. fees of INR 300 within 30 days of passing the special resolution.

NOTE: additional cost may apply if filing exceeds the due date

The attachments include:

  • Notice of EGM
  • Certified copy of the special resolution
  • Copy of explanatory statement under Sec. 102
  • Altered MOA and AOA
  • Copy of Certified board resolution
NOTE: after filing for MGT-14 we can proceed for INC-6 as serial no. Of MGT-14 will be used to file for INC-6.

Form INC-6 for Application for Conversion

Form INC-6 needs to be filed to ROC for conversion of a public company to One Person Company with required fees under Companies (Registration offices and fees) Rules, 2014 and necessary annexure which includes

  • A separate list of members and creditors.
  • Copy of NOC of secured creditors
  • NOC of members
  • Latest audited balance sheet along with profit and loss accounts
  • An affidavit by the directors of the company confirming their consent for the conversion
  • A declaration by an affidavit by confirming the company share capital is less than 50 lakhs and the annual turnover is below two crores.
  • Consent of nominee with enclosure according to form INC-3
  • PAN card, identity proof and resident proof of both the director and the nominee.

 

Step - 6: CERTIFICATE OF CONVERSION

After filing all the documents the ROC (registrar of companies) check the Eforms and documents submitted for the conversion. Following the fulfilments and satisfaction of ROC it issues a certificate of conversion stating effective conversion of the private company to One Person Company.

What Documents are Required After the Conversion of the Company?

Few documents need to be altered or issued fresh post-conversion of the company

  1. A printed copy of new MOA AND AOA
  2. New PAN no. Of the company
  3. Updated bank account details
  4. A new name of the company
  5. Informing all the concerned authorities like Excise, Sales Tax etc about the change.

Fee Structure of form MGT-14 and INC-6

Fee for Filing E-forms
Nominal Share Capital Fee Applicable
LESS THAN 1,00,000 INR 200
1,00,000 – 4,99,999 INR 300
5,00,000 - 24,99,999 INR 400
25,00,000 – 99,99,999 INR 500
1,00,00,000 or more INR 600
NOTE: FEE FOR FILING E-FORMS IN CASE OF COMPANY NOT HAVING SHARE CAPITAL IS INR 200(ONLY APPLICABLE IN FORM MGT-14
Additional Fee Rules
Period of Delays Fee Applicable
Up to 30 days 2 times normal fees
30 to 60 days 4 times normal fees
60 to 90 days 6 times normal fees
90 to 180 days 10 times normal fees
More than 180 days 12 times normal fees

In the case of IFSC company, the additional fee shall be applicable only after the expiry of 60 days of the event date.

However, in case of form filing after 60 days, the logic delay days’ calculation for computing the additional fee shall remain same in case of other than IFSC company i.e. due to date shall be considered as (Event Date = 29) even for an IFSC company.

 


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