If a One Person Company meets the following criteria, it must be converted to a Private Limited Company.
In either of the previous scenarios, the One Person Company must convert into a private or public company within six months. The procedure for converting a one-person corporation into a private limited company or limited company is discussed in this article.
The provisions of Section 18 of the Companies Act of 2013, and the Companies (Incorporation) Rules of 2014, in particular Rule 7(4) of the Companies (Incorporation) Rules of 2014, must be followed for both the voluntary and compulsory conversions of an OPC into a Private Limited Company.
Voluntary Conversion is permissible when two years is expired from the date of incorporation of the OPC.
Compulsory Conversion of OPC is mandatory when paid-up share capital exceed Rs Fifty lakhs and previous three-year average revenue more than Rs 2 crores.
The OPC's shareholders shall hold a General Meeting to pass resolutions boosting paid-up capital (if necessary), increasing the number of shareholders, and appointing directors to meet the criteria of a Private Limited Company. At least 2 shareholders and 2 directors are required to transform an OPC into a Private Limited Company.
The one-person company must submit a copy of the special resolution in form- MGT 14 with the Registrar of Companies within thirty days of passing the solution.
1. The company's directors should make a declaration in the form of an affidavit which certifying that all of the company's members and creditors have agreed to the conversion.
2. The members' list, as well as the creditors' list.
3. The most recent audited financial statement.
4. A copy of No Objection letter of secured creditors.
To form and operate an OPC, only one person and one shareholder are required. Furthermore, the director and shareholder of the One Person Company is the same person who owns all of the company's shares.
During the incorporation of a Private Limited Company, a minimum of 2 shareholders are required. A private limited company's shareholders might also be any entity.
Because just one member bears the entire financial responsibility, fundraising is a difficult element of an OPC.
A Private Limited Company, on the other hand, receives funds from venture capitalists, angel investors, and other sources.
There is just one member in the firm. Hence there is no need for an Annual General Meeting (AGM) or Board meetings, as the name suggests.
On the other hand, a private limited company has a Board of Directors with two and a maximum of fifteen directors at the time of incorporation. In addition, four Board meetings and one AGM must be held each financial year.
The recommended benefit of forming a private limited company in India is that international nationals and non-resident Indians can do so. Foreign Direct Investment is also possible through a Private Limited Company.
In an OPC, however, only Indian citizens are permitted to form a company. As a result, Foreign Direct Investment is not allowed in a one-person company.
Some activities, such as securities investment and NBFC, are prohibited by the OPC.
A corporation registered as a Private Limited Company, on the other hand, can participate in these types of activities with the approval of the relevant regulator.
In a Person Company, the only director member has complete ownership of the company, which cannot be shared with anyone else.
The private limited corporation, on the other hand, has its split between two or more members. The voting power is also apportioned based on the proportion of shares held by each member.
The costs of forming a One Person Corporation and a private company approximate the same, but complying with regulations varies.
In a Private Limited Company, however, the compliance cost exceeds the OPC.
The company's liabilities, debts, or obligations will not be changed in any manner following the conversion. As a result, the corporation is responsible for all of its past commitments.
An OPC is a company with only one shareholder as a member, whereas a Private Limited Company (PLC) is a company with a minimum of two members and a maximum of 200 members.
If the OPC's paid-up share capital reaches more than 50 lakh, the OPC must convert itself into a private company.
- If the annual turnover has exceeded two crores for three (3) years.
NO, an OPC cannot be formed or changed into a non-profit, charitable organization, and it cannot engage in non-banking, financial, or investment activities, including investing in corporate securities.
Yes, at the time of incorporation, you must select a person and have his prior consent in the Form INC-3.
• OPC is unable to engage in NBFC-related operations.
• While OPC cannot buy or invest in securities in other bodies corporate in its name, members can invest in the shares of other corporate bodies.
• The OPC is unable to issue or assign shares to anybody other than its members.