What Is a Private Limited Company (PLC)?
Private limited companies (PLCs) are privately owned firms that specialize in small businesses. Members in a private limited company have limited liability in relation to the number of shares they own. There is no public trading of shares in a private limited company. Those with high goals and objectives are more likely to choose to set up a private company.
Based on the Companies Act of 2013, companies can have a minimum of two members and a maximum of 200. A minimum of two directors and a maximum of 15 directors are required to oversee corporate activities. Foreign nationals/NRIs can also serve as directors of private limited companies.
What Is a One Person Company?
The concept of a one-person company, or OPC, is relatively new in the Indian corporate sector. To incorporate this structure, only one person is needed. Nevertheless, a single person is not permitted to incorporate more than one OPC.
An OPC, on the other hand, is a separate legal entity from the proprietorship firm. A proprietorship firm isn’t a separate legal entity from the proprietorship firm.
There is also a limit of one nomination per company for each nominee.
Converting a Private Limited Company to an Open-Ended Company Has Several Benefits
A private limited company can be converted to an OPC for the following reasons:
Managing Annual Returns with Ease
An OPC requires far fewer annual and ROC filings than any other type of business structure. The director does not have to obtain clearance from the company secretary before filing.
Making Decisions with Ease
An OPC is simple to operate because it requires faster decision-making than any other form of business organization.
AGM is Not Required
One-person companies are not required to hold an annual general meeting because the laws governing one-person companies are less strict than those governing private corporations.
A Private Limited Company is Converted into a One-Person Company
Step 1: Convene the board
At least seven days prior to the meeting, the board of directors must provide a notice. The agenda must be included.
Step 2: Organize a board meeting
To conversion of private company into OPC, the directors must approve a board resolution and take the following business decisions:
- Decide when, where, and how the EGM will take place
- The notice of the EGM needs to be approved
- Approval of the EGM agenda and explanation statement
- Directors are authorised to issue a notice for the extraordinary general meeting.
Step 3: Convene the EGM
At least 21 days prior to the EGM date, the company must send a notification to all members, auditors, and directors.
Step 4: Creditors’ NOC
Creditors and shareholders must issue a formal certificate of no objection to the company.
Step 5: Hold the EGM
For a private limited company to be converted into an OPC, the shareholders must pass a special resolution.
Step 6: Submit the MGT-14 form
Directors must file MGT-14 with the ROC within 30 days of the resolution’s approval. The form includes the following attachments:
- A copy of the notice of the EGM and an explanation
- Special resolution certified by a notary
- Changes to the association’s memorandum
- Changes to the articles of association
- Board resolution certified by the board.
Step 7: Submit INC-6
The form INC-6 must now be submitted as an application for the conversion of a private limited company into an OPC. It includes the following attachments:
- Members’ list
- The creditor’s list
- Balance sheet audited most recently
- P&L statement updated
- Creditor’s no-objection certificate
- A letter of confirmation from the shareholders
- The directors have issued the following statement:
- All creditors have given their consent
- There are 50 lakhs paid-up shares in the company
- The company has an annual turnover of less than ₹02 crores.
Step 8: Certificate issuing
After reviewing the papers, the ROC will issue a certificate of conversion to an OPC.
Requirements after conversion
As a result of the conversion, the following requirements must be met:
- Get the company’s PAN (permanent account number)
- Establish a new company name on stationery and letterhead
- Make sure the company’s bank account information is up to date
- The conversion should be informed to all authorities
- MOA and AOA printed copies.