The Need to Convert

A company is benefitted with several advantages once it gets changed from a private enterprise. The legal status of One Person Company is comparatively higher. Other advantages include limited liability, reduced tax burdens, flexibility in the bank and operational jobs, increased decision-making power, and an authenticated corporate identity. It means that the so formed new One Person Company (OPC) would still be liable for the claims, liabilities, and obligations after getting converted from a private company.

A company can be converted from a private company to a One Person Company under rule 7 of Companies Incorporation rule 2014. The condition for the private company to get converted into a One Person Company is that the private company should register under S. 8 of the Companies Act 2013. Further, the company should have an annual turnover of Rs 2 crores or should have a share capital of Rs 50 lakh rupees. A no-objection certificate, a special resolution post certificate, and specific documents required registrar signatures for the process of conversion. A question arose whether an OPC consists of a single person in which that single person maintains and performs all the tasks. The most straightforward answer is that an OPC means that there cannot be more than one shareholder for the company ownership, no way, it restricts the ability of the supervisor or the manager of OPC to hire employees. The owner of OPC can have multiple directors and employees under him for a well-organized system and efficient performance of tasks.

Key Points

OPC is controlled or supervised by an individual, whereas a group of people manages PLC. In a private company, as a group of people runs it, a nominee cannot be appointed. OPC can be run by a single person, in his absence, nominee to be designated. The new nominee will take his position as a member of the company. Further, an OPC can have only one director, and a private company can have a maximum of two directors.

An OPC can spend or invest in another company like any other company. Conclusively, an OPC is a sub-branch of the private limited companies and can have lawful possession of any other company or stake in any other company. Acknowledging the concept of One Person Company is the safest as well as the most comfortable form of business to manage. It is easy to maintain the compliances of an OPC in comparison to a private company.

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