According to the Companies Act of 2013, which creates a mechanism to convert one class of company into another, the conversion of a PLC (Private Limited Company) into an OPC (One Person Company) is permitted. Beginning on April 1, 2014, Section 18 of the Act expressly permits the conversion of a private limited company that is already registered.
The responsibilities and contractual obligations of the business before to conversion would not be affected by the Conversion of Private Limited Company to OPC; these claims, liabilities, and obligations would continue to be legally enforceable, and the resulting OPC would be responsible for them.
A private company’s organizational structure frequently collapses when one of its promoters decides to resign from his position. The expert in this case proposes that you convert your private limited business to an OPC. An OPC is a type of business structure that can be incorporated with just one stakeholder.
Benefits of One-Man Businesses
- Decision-making is simplified because there is only one person who must decide. This expedites the decision-making process and frees up time for other useful tasks.
- Lower Compliance: For one-person businesses, ROC and annual compliance are quite low.
- Less labor is required for Person Companies in terms of annual filing, share certificates, etc.
- No AGM necessary: Unlike a private limited company, a one-person business is not required to hold an annual general meeting or to follow many other legal criteria
Checklist Requirements for PLC to OPC Conversion
The following guidelines must be followed in order to transform the private limited company into a one-person business:
- Both the balance sheet and the company’s books of accounts should have been properly prepared.
- All of the company’s ROC (Registrar of Companies) returns have been listed and submitted.
- to verify that the share certificates are appropriately matched with the payment of stamp duty and that the corporation has made the required payment on the share certificate’s outcome.
- The business has completed all necessary TDS returns and deducted all applicable TDS (Tax Deducted at Source).
- Before beginning the conversion, the corporation paid the applicable VAT, service tax, or GST, and filed the necessary paperwork.
- to determine whether the business has up-to-date registers at its registered office and maintains a record of meeting minutes for its board of directors and shareholders.
- The firm is registered under the shop, and the establishment, where they have authority over offices, shops, warehouses, etc., complies with all applicable state legislation.
- The business complies with the professional tax regulations, if any are relevant in the state where its registered office is and the states where it employs people.
- If there are more than 20 employees, the firm is registered with PF, and if there are more than 10, the company is registered with ESIC. Both registrations are contingent upon the company filing monthly returns and making required payments to PF and ESIC.
1. What are the benefits of converting a Private Limited Company to OPC?
Benefits of OPC Conversion for a Company
- Since there is only one person who must make the choice, it is simple and quick.
- For OPC, compliances on an annual and ROC basis are much lower.
- OPC has fewer tasks involving share certificates, annual filings, etc.
2. What are the steps involved in the process of conversion of Private Limited Company to OPC?
Conversion of a Company to OPC Process
- Organize a board meeting.
- Request an EGM (Extraordinary General Meeting)
- Creditors’ No Objection Certificate (NOC).
- Hold an EGM (Extraordinary General Meeting).
- Certificate issuance after form submission to the ROC.