Process of Conversion of private company into OPC




A private company is a popular form of business organization that is governed by the Companies Act, 2013. It can have a minimum of two and a maximum of 200 members. On the other hand, an OPC

Understanding Private Companies

Before we delve into the process of Conversion of private company into OPC, let us understand what a private company is. A private company is a type of company that is privately held and not publicly traded. It can have a minimum of two members and a maximum of 200 members. Private companies are regulated by the Companies Act, 2013, and are popular among small business owners.

One Person Company (OPC) - An Overview

An OPC is a type of company that is owned and controlled by a single person. It was introduced by the Companies Act, 2013, to encourage small business owners to start their own companies. The owner of an OPC is known as the sole member and has complete control over the business.

Advantages of Conversion

There are several advantages of converting a private company into an OPC. One of the most significant advantages is limited liability. As a sole member of an OPC, the owner's liability is limited to the extent of his/her shareholding. This means that the owner's personal assets are not at risk in case of any financial liabilities of the company.

Another advantage is that the owner has complete control over the business. Since there are no other shareholders, there are no conflicts of interest, and the owner can make all the decisions regarding the business.

Eligibility Criteria for Conversion

To be eligible for conversion, the private company must have a paid-up share capital of less than Rs. 50 lakhs and a turnover of less than Rs. 2 crores. Additionally, the private company must not have raised any funds from the public in the form of deposits or debentures.

Procedure for Conversion of a Private Company into an OPC

The process of converting a private company into an OPC involves several steps, including obtaining approval from the Registrar of Companies (ROC). The steps involved are:

  1. Hold a board meeting to obtain approval for the conversion.
  2. Obtain a no-objection certificate (NOC) from all creditors and members of the company.
  3. File the application for conversion with the ROC.
  4. Obtain approval from the ROC for the conversion.
  5. File the memorandum of association (MOA) and articles of association (AOA) with the ROC.
  6. Obtain a new certificate of incorporation from the ROC.

Documents Required for Conversion

The documents required for conversion are:

  1. Board resolution approving the conversion.
  2. NOC from all creditors and members of the company.
  3. Application for conversion in Form INC-6.
  4. MOA and AOA of the OPC.

Compliances to be Completed after Conversion

After the conversion is complete, there are certain compliances that the OPC must adhere to. These include:

  1. Filing of annual returns and financial statements with the ROC.
  2. Conducting an annual general meeting (AGM).
  3. Maintaining proper books of accounts and registers.
  4. Getting the accounts audited if the turnover exceeds Rs. 1 crore.

Taxation Aspects of Conversion

From a taxation perspective, the conversion of a private company into an OPC is considered a transfer of capital assets. This means that the company will be liable to pay capital gains tax on the transfer. Additionally, the OPC will be required to obtain a new Permanent Account Number (PAN) and update all its registrations accordingly.

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