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A private limited company is a company that is held privately by a small group of individuals. A private company needs to have a minimum of two directors and members. The maximum number of directors can be 15, and the maximum number of members can be 200 under the Companies Act, 2013.
One Person Company (OPC) is a new concept introduced in the Companies Act, 2013. A single individual can register an OPC. There should be only one member in an OPC. There cannot be more than one member, but it can have a maximum of 15 directors.
The conversion of one company class to another class, i.e. conversion of a private limited company into OPC is provided under Section 18 of the Companies Act, 2013 (‘Act’) and Rule 7 of the Companies (Incorporation) Rules, 2014. The compliance requirements are less in OPC than in private limited companies; thus, private limited companies choose to convert into OPC.
The company directors must meet and decide on a date for conducting the meeting of the shareholders, known as the Extraordinary General Meeting (EGM). The notice for holding the board meeting should be sent to the members at least seven days before the board meeting date. The board meeting agenda should be stated in the notice. The notice must be passed as a special resolution to be adopted by the shareholders concerning the conversion of a private company to OPC.
The agenda of the board meeting should be:
A notice for the Extraordinary General Meeting (EGM) should be sent to all the company’s directors, members, and auditors. The notice for EGM must be sent at least 21 days before the date of the EGM.
The company must get a No Objection Certificate (NOC) from the existing creditors and shareholders before passing a special resolution in the EGM. The NOC must be obtained in writing.
The EGM must be conducted on the assigned time, date, and place as per the notice. The EGM should be held for the following purposes:
The company must file certain e-forms with the Registrar of Companies (ROC) for conversion of a private company into One Person Company (OPC), which are as follows:
The ROC will verify the submitted e-forms and attached documents filed by the private company for converting into OPC. When the ROC is satisfied that the private limited company has complied with the requirements, he/she will issue a certificate for the conversion of the private company into OPC.
The conversion of a private company to OPC would not affect the contractual obligations and responsibilities of the company before conversion, and such liabilities, claims and obligations will be enforceable by law. The converted OPC will be liable for the liabilities, claims and obligations of the private limited company.
The following attachments should be made with the Form MGT-14:
The following attachments should be made with Form INC-6:
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