While planning to convert Proprietorship to One Person Company OPC in India, following are the relevant information including documents required, eligibility requirements, procedure, advantages and other relevant details.
A One Person Company OPC is an advanced and better form of a Sole Proprietorship which is essentially great as a business structure for medium sized firms. The difference between a Sole Proprietorship and an One Person Company OPC is that in the latter, the single promoter gets full control over the company while limiting his liabilities towards the company and protecting his personal assets. Here, the owner of the company is also a shareholder.
One Person Company OPC also mandatorily has to appoint a director for management purposes. However, the OPC also has to have a nominee so that the company has a continuous existence unlike a sole Proprietorship. Hence, once the business grows and the stakes are higher, it is a good business decision to apply for a conversion of your Sole Proprietorship to a One Person Company.
Advantages for conversion from Proprietorship to One Person Company (OPC) in India
- OPC is an independent legal entity – OPC is a separate legal entity independent of the status of its owner, hence it has a perpetual existence even if its owner doesn’t.
- Limited Liability – In case of an OPC, the owner’s personal assets remain untouched because of the provision of protection under limited liability to the extent of their own share in the company.
- Expands Business Opportunities – Receiving funding from larger organizations becomes easier in case of OPCs as compared to Sole Proprietorships. This is because OPCs are registered just as private companies and private companies seem to be more structured and trustworthy. The suppliers as well as the customers gain confidence in the business in case of OPC.
- Easy Management Structure – The management structure is very uncomplicated because there is only one member and unlike a private limited company, there is no mandatory compliance to hold annual general meetings. A OPC also means all the decisions are taken by one person who is the only one with authority to make decisions regarding the company.
- Better Organizational Structure – The OPC as a business structure is similar to a private limited company and hence has a set structure as well. This is not the case with a Proprietorship.
Minimum Capital Requirement for conversion Proprietorship to a One Person Company OPC in India
- Authorised capital of 1 lakh at the time of initiation of the company.
- The capital should not exceed the limit of Rs 50 lakh at the time of incorporation.
List of Required Documents for Conversion from Proprietorship to One Person Company OPC in India
- Copies of PAN Card, Aadhar Card, Voter ID, Passport of all the directors.
- Latest Bank Statement in the name of the director and the nominee of the OPC(should not be older than 2 months)
- House Tax Receipt or Proof of Registry of registered office space (in case of owned property)
- No Objection Certificate from the owner along with Rent Agreement of the registered office space (in case of rented property)
- Written Consent of Nominee (which needs to be filed with Registrar of Companies)
- Passport size photos of all the directors and the nominee.
Procedure for the Conversion of Proprietorship to One Person Company OPC in India with Seedup.in
- Fill the forms – The first and foremost step requires you to fill out the questionnaires and submit the required documents.
- Application for DSC- The next step is to apply and procure the Digital Signature Certificates for all the directors.
- Reservation for Name – The next step is checking for the availability of the name and then reserving it under RUN.
- Drafting of MoA and AoA – The next step is preparing all the documents by drafting the MoA, AoA along with other documents and then getting them notarized.
- Application for OPC Registration – After arranging for all the documents, we have to file an application for the company registration
- Application for DIN,PAN and TAN – After the incorporation of the OPC, applications for the allotment of the DIN, PAN and TAN of the OPC have to be filed.
This entire procedure with Seedup.in should take around 12- 15 working days.