A Private Company is a firm that works below private possession. A Private firm could issue stock and have shareholders; however, their shares don’t trade on public exchanges associated aren’t issued through an initial public offering.
A one-person company is an organization that has only one person on its members. What is more, members of an organization are nothing, however subscribers to its memoranda of association or its shareholders.
Benefits of One Person Company
A Separate legal entity
OPC may be a separate legal entity associated capable of doing everything that an enterpriser does.
Straightforward Funding
It is an organization that may be a personal company, OPC will raise funds through the capital, monetary establishments, angel investors, etc.
A lot of opportunities
The advantage of One Person Company is it’s a lot of opportunities as liability is restricted to the extent of the worth of the share.
Single Owner
You are solely the owner useful in fast decision-making, dominant, and managing the business while not following any elongated processes.
Credit rating
The OPC with a dangerous credit rating could even get the loan.
Checklist for conversion
- A correct book of accounts must be maintained with the P&L statement and Balance Sheet that is audited.
- ROC Returns should be there.
- All the payments should be after TDS deductions.
- Paid GST and has filed for acceptable returns.
- A complete record of shareholder’s conferences.
- A company should be legalized under the Shops of Establishment Act.
- Must comply with all the tax deduction which is applicable as per the State.
- According to the number of employees a company has, it must be registered under PF or ESIC.
Convert Private Limited to One Person Company
- The company should conduct an Extra-Ordinary General Meeting (EGM). All the members should be present at that meeting.
- All the shareholders and members should give consent.
- Registrar of Companies should approve all the changes and new resolutions being approved by the members. For this company has to fill form MGT-14.
- On the clearance of form MGT-14, the company can fill the form INC-6 for the conversion of the company.
Documents Required
- A consent letter is given by all the members of the company.
- Financial details of the company.
- Letters from creditors giving consent for the paid-up capital and turnover.
Frequently Asked Questions
Are NRIs allowed to form One Person Company?
No. solely Indian born voters will be forming One Person Company.
Can One Person Company accept Foreign Direct Investment?
No, FDI isn’t allowed for One Person Company.
Will a foreigner/ NRI become the Nominee of 1 Person Company?
No, the candidate ought to even be associate Indian resident subject.
What if a nominee of 1 OPC becomes the nominee of another OPC?
No, it is not possible. In this Nominee of 1 OPC has to leave its position before joining second OPC.
What if, if the turnover of the corporate exceeds Rs.2 Crores?
As per the Act, the typical annual turnover throughout mustn’t exceed Rs.2 Crores.
In case the name or the designation of the director/s isn't mentioned in Certificate, then who will take over as the director of the company?
It might be assumed that the only investor shall be the sole director.
Is it obligatory by law to urge the signature of an organization Secretary on the associational come of an OPC?
It is not obligatory.
Whether or not associate OPC may be converted to a Public company and vice versa?
A single company can be converted to a Public company. But the vice versa of it is not true.
Conditions to convert Private Company to One Person Company?
- Paid-up capital of 50 lac.
- Turnover less than 2 cr.
Any NBFC (Non-Banking Financial Corporation) can make One Person Company?
No, Under the Act it is stated that no OPC can perform the function of an NBFC.