Conversion of a Company to a One Person Company (OPC)

Overview

The conversion of a company into a One Person Company (OPC) is governed by the provisions of the Companies Act, 2013. An OPC is a type of private company that allows a single individual to operate a business with limited liability.

Steps for Conversion

1. Eligibility Criteria:
2. The existing company must be a private limited company.

3. The company should have only one member after conversion, which means that all other members must exit or transfer their shares.

4. Approval from Members:

5. Obtain a resolution from the existing members approving the conversion to an OPC.

6. Nomination of a Nominee:

7. The memorandum of the OPC must indicate the name of another person who will become a member in the event of the subscriber''s death or incapacity. This person must provide prior written consent, which should be filed with the Registrar at the time of incorporation Bakshi Faiz Ahmad VS Bakshi Farooq Ahmad - J&K (2018).

8. Filing with Registrar:

9. File the necessary forms with the Registrar of Companies (RoC) for conversion. This includes:

   • Form INC-6 for the conversion of a private company into an OPC.
   • The memorandum and articles of association of the OPC.
   • Consent of the nominee.
   • A declaration that the company meets the criteria for conversion.

10. Compliance with Other Provisions:

11. Ensure compliance with all other provisions of the Companies Act, 2013, including any necessary amendments to the articles of association to reflect the change in structure.

12. Certificate of Incorporation:

13. Upon successful filing and approval, the RoC will issue a new certificate of incorporation reflecting the status of the company as an OPC.

Important Considerations

• Liability: The liability of the member in an OPC is limited to the extent of the unpaid share capital [Bilal
  VS II Addl Distict and Session Judge Bulandshahr
• Allahabad (2003)](https://supremetoday.ai/doc/judgement/02500043747).
• Restrictions: An OPC cannot carry out non-banking financial investment activities, and it cannot be converted into a company other than a private company for two years from the date of incorporation Bakshi Faiz Ahmad VS Bakshi Farooq Ahmad - J&K (2018).
• Change of Nominee: The member of the OPC can change the nominee by giving notice to the company, which must then inform the Registrar Bakshi Faiz Ahmad VS Bakshi Farooq Ahmad - J&K (2018).

Conclusion

Converting a company into a One Person Company involves a structured process that requires compliance with the Companies Act, 2013. It is essential to ensure that all legal requirements are met, including the nomination of a successor and proper filing with the Registrar. This conversion can provide the benefits of limited liability while allowing for single ownership and control of the business.

Recommendations

• Consult with a legal professional to ensure all steps are followed correctly.
• Prepare all necessary documentation in advance to facilitate a smooth conversion process.

References: Bakshi Faiz Ahmad VS Bakshi Farooq Ahmad - J&K (2018)Bilal
VS II Addl Distict and Session Judge Bulandshahr
- Allahabad (2003)]