Procedure for Conversion of Private Limited Company to One Person Company

Khushboo Sharma

Khushboo Sharma

Published on: Oct 12, 2022

Aakanksha Singhal

Updated on: Oct 18, 2023

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Introduction

One Person Company (OPC) refers to a form of company that has only one person as a member unlike a Private Company which limits the number of its members to two hundred and by its articles restricts the right to transfer its shares

One Person Company (OPC) enjoys many privileges and exemptions from the compliance requirements in terms of the provisions of Companies Act, 2013 as compared to other form of companies. And, in case any Private Limited Company other than a company registered under section 8 of the Act, intends to convert itself in to a One Person Company (OPC) it may do so by passing a special resolution and obtaining written No objection Certificate (NOC) from its members and creditors to this effect

Mandatory Requirements

1. Alteration of Memorandum of Association and Articles of Association in accordance with Section 122(3) of the Companies Act, 2013 to give effect to the conversion
2. Obtain a written No objection Certificate (NOC) from its members and creditors to give effect to the conversion
3. Passing a special resolution in a duly convened General Meeting for effecting the conversion

Procedure

1. Convene a Meeting of the Board of Directors [As per section 173 & SS-1]
   Refer to the Procedure for Conducting Board Meeting for a detailed procedure
2. Alteration of Memorandum and Articles [Rule 6(1) of the Companies (Incorporation) Rules, 2014]
   The memorandum and articles of the Private Company shall be altered by passing a resolution in accordance with section 122(3) of the Act to give effect to the conversion and make necessary changes incidental thereto
3. Convene General Meeting [Section 96, 100 and Secretarial Standard (SS-2)]:
   Refer to the Procedure for Conducting General Meeting for a detailed procedure.
4. Filing of Form MGT-14 with ROC [Section 117 of the Companies Act, 2013 and Rule 7(3) of Companies (Incorporation) Rules, 2014]:
   The company shall file a copy of the Special Resolution with the Registrar of Companies (ROC) in form MGT-14 within 30 days of passing such resolution.
5. Obtain Written Consent from Nominee [1st Proviso to Section 3(1) of Companies Act, 2013 and Rule 4(1) & 4(2) of Companies (Incorporation) Rules, 2014]
   The subscriber to the memorandum of a One Person Company (OPC) shall nominate a person, after obtaining the prior written consent of such person, who shall, in the event of the subscriber’s death or his incapacity to contract, become the member of that One Person Company (OPC). Also, name of such nominated person shall be mentioned in the memorandum of One Person Company (OPC)
   Note:All the enclosures along with this form shall be submitted as an attachment to other forms i.e., Form No. INC-2, INC-4, or INC-6 as the case may be
6. File Form No. INC 6 [Section 18 of the Companies Act, 2013 and Rule 7(4) of the Companies (Incorporation) Rules, 2014]
   The Private Company shall file an application in Form No. INC 6 pertaining to its conversion into One Person Company (OPC) along with the fees as provided in the Companies (Registration offices and fees) Rules, 2014 and the following documents
   • Mandatory attachments in all the cases
     • Altered e-Memorandum of association and e-articles of association
     • Copy of the duly audited and certified latest financial statement
     • Copy of board resolution authorizing giving of notice
   • Mandatory attachments in case of conversion of Private Company to One Person Company (OPC)
     • Altered e-MOA and e-AOA
     • Affidavit of directors confirming that all the members of the company have given their consent for conversion
     • Copy of No Objection letter (NOC) of every creditor
     • Consent of the nominee in Form No. INC-4 along with all enclosures
     • Copy of PAN card of the nominee and member
     • Proof of identity of the nominee and member
     • Residential proof of the nominee and member
     • Any other information can be provided as an optional attachment(s)
7. New Certificate of Incorporation [Section 13(3) of the Companies Act, 2013 and Rule 29(2) of the Companies (Incorporation) Rules,2014 On approval of Form MGT-14 and Form INC-6, the Registrar will issue a fresh Certificate of Incorporation with the Changed name to the applicant company in Form INC-25
8. Post Conversion Compliances
   • Every Alteration made in the memorandum of the company shall be noted in every copy of the memorandum or articles as the case may be [Section 15(1) of the Companies Act, 2013]
   • Every Company shall
     • Print the new Altered MoA & AoA with the new Certificate of Incorporation
     • ii. Paint or affix its name and address of its registered office outside every of its place of business and in legible letters [Section 12(3)(a) of the Companies Act, 2013]
     • Have its name engraved in legible characters on its seal, if any [Section 12(3)(b) of the Companies Act, 2013]
     • . Get its name, address of its registered office, and Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers, notices, and other official publications[Section 12(3)(c) of the Companies Act, 2013]
     • . Have its name printed on hundies, promissory notes, bills of exchange, and such other documents [Section 12 (3) (d) of the Companies Act, 2013]
   • Send the new address of its registered office to all the Banks, authorities, and other Basic Utility Service providers as applicable.
9. File Necessary Amendment Application under the following Acts
   • Goods and Services Act
   • Shops & Establishment Act
   • Factories Act
   • Inter-State Migrant Workmen Act
   • Private Security Agency Act
   • Employees Provident Fund Organization (EPFO)
   • Employees State Insurance Corporation (ESIC)
   • Other Labor Laws
   • Industry-Specific Laws
10. Key Points for One Person Company (OPC)
    • A minor shall not become a member or nominee of the One Person Company.
    • Only a natural person who is an Indian citizen and resident in India shall be eligible as a member and nominee of the One Person Company
    • A minor a foreign citizen, a Non-Resident, and any person incapacitated by contract shall not become a member or nominee of the One Person Company
    • A minor can’t hold shares with beneficial interest into One Person Company.
    • No Specific tax advantage provide to One Person Company and other tax provisions apply as apply on other form of Company.