There might be a need to convert a private limited company into a one-person company (OPC) due to the departure of one or more co-founders or promoters. In this article, we look at the process of converting a private limited company into an OPC in detail.
Organize board meetings
When converting a private limited company to an OPC, a Board Meeting must be conducted to obtain the in-principle approval of the Directors and fix the date, time and place for holding an Extraordinary General Meeting (EGM) to obtain shareholder approval through a special resolution.
Based on the Companies Act, 2013, a support notice of an EGM should be annexed to the notice of a General Meeting, along with an Agenda and an Explanatory Statement. As permitted by the Board, a Director or Company Secretary should also send a notice of the Extraordinary General Meeting (EGM). All members, directors, and auditors of the company should be notified of the Extraordinary General Meeting (EGM).
A General Meeting Extra-Ordinary
A special resolution for the conversion of a private limited company into a one-person company (OPC) must also be passed at the Extra-ordinary General Meeting (EGM) as specified in the notice.
The MGT-14 file
To convert a private limited company into an OPC, the company must file the special resolution passed by shareholders with the Registrar of Companies that is associated with that company. Hence, file form MGT-14 with the relevant Registrar of Companies within 30 days of passing the special resolution, with approved fees and along with subsequent attachments:
The file to be converted
In order to convert to a One Person Company, the following documents must be filed with the INC-6:
- By way of affidavit duly sworn, directors confirm that all members and creditors have approved the conversion.
- Declaration that the company has a paid-up share capital of fifty lakhs rupees or less and/or an average annual turnover of two crores rupees or less.
- Members’ list
- Listed below are the creditors
- A copy of the most recent profit and loss statement and audited balance sheet
- Secured creditors’ no objection letter.
Private Limited Company Conversion
Upon filing the forms with the relevant documents, the Registrar of Companies (ROC) will verify the E-forms and attached documents filed by the company for conversion of private limited company into OPC. Following approval of the company’s compliance with approved requirements, the Registrar will issue a certificate certifying that it has become a one-person company.