CAN OPC BE CONVERT TO PRIVATE LIMITED
Yes, an One Person Company (OPC) can be converted to a Private Limited Company (Ltd) as per the Companies Act, 2013. The process of converting an OPC to a Pvt Ltd is relatively straightforward and can be completed in a few simple steps.
Steps to Convert an OPC to a Pvt Ltd
- File Form INC-22 with the RoC.
The first step is to file Form INC-22 with the Registrar of Companies (RoC). This form is used to notify the RoC of the intention to convert an OPC to a Pvt Ltd. The form must be signed by the sole member of the OPC.
- Amend the MOA and AOA.
The memorandum of association (MOA) and articles of association (AOA) of the OPC must be amended to reflect the conversion to a Pvt Ltd. The amendments must be approved by the sole member of the OPC and filed with the RoC.
- Issue new shares.
If the OPC has any outstanding shares, they must be converted into fully paid-up shares. This is because a Pvt Ltd must have at least two members, and each member must hold at least one share.
- File Form INC-32 with the RoC.
Once the MOA, AOA, and shares have been amended, Form INC-32 must be filed with the RoC. This form is used to notify the RoC of the completion of the conversion process.
- Obtain a fresh PAN and TAN.
Once the conversion is complete, the OPC will need to obtain a fresh PAN and TAN. These are the permanent account number and tax identification number, respectively, and are required for all companies.
- Notify creditors.
The OPC must notify its creditors of the conversion to a Pvt Ltd. This is to ensure that creditors are aware of the change in ownership and that their rights are protected.
- Make changes to the company’s branding.
The OPC will need to make changes to its branding to reflect the conversion to a Pvt Ltd. This may include changing the company’s name, logo, and website
Documents Required for Conversion of OPC to Pvt Ltd
The following documents are required for the conversion of an OPC to a Pvt Ltd:
- Form INC-22
- A copy of the amended MOA and AOA
- A copy of the new shares (if any)
- A copy of the PAN and TAN of the new company
- A letter of no objection from the creditors (if any)
Cost of Conversion
The cost of converting an OPC to a Pvt Ltd will vary depending on the specific circumstances of the company. However, the overall cost is likely to be in the range of Rs. 5,000 to Rs. 10,000.
Advantages of Converting to a Pvt Ltd
There are a number of advantages to converting an OPC to a Pvt Ltd. These include:
- Increased credibility and visibility: A Pvt Ltd is seen as being more credible and visible than an OPC. This can be beneficial for attracting customers, suppliers, and investors.
- Increased flexibility: A Pvt Ltd has more flexibility in terms of its structure and operations than an OPC. This can be beneficial for growing businesses.
- Increased capital raising capacity: A Pvt Ltd is able to raise more capital than an OPC. This can be beneficial for businesses that need to raise funds to grow.
Limited liability: The liability of the members of a Pvt Ltd is limited to the amount of their investment in the company. This means that the members’ personal assets are protected in the event of the company’s insolvency
Disadvantages of Converting to a Pvt Ltd
There are a few disadvantages to converting an OPC to a Pvt Ltd. These include:
- Increased compliance requirements: A Pvt Ltd is subject to more compliance requirements than an OPC. This can be an administrative burden for businesses.
- Increased cost: The cost of running a Pvt Ltd is higher than the cost of running an OPC. This is due to the additional compliance requirements and the need to maintain a higher level of accounting records.
- Increased bureaucracy: The process of converting an OPC to a Pvt Ltd can be bureaucratic and time-consuming.
Converting an OPC to a Pvt Ltd can be a beneficial decision for businesses that are looking to increase their credibility, visibility, and flexibility. However, it is important to weigh the advantages and disadvantages before making a decision.