The transformation of a Private Limited Company (PLC) into an One Person Company (OPC) is facilitated by the Companies Act, 2013, which introduces a mechanism for the conversion of one category of company into another. Section 18 of the Act, effective from 1 April 2014, explicitly permits the conversion of an already registered private limited company.
The transition from a Private Company to an OPC is designed to be a seamless process. It is important to note that this conversion does not impact the pre-existing responsibilities and contractual obligations of the company. Claims, liabilities, and obligations incurred before the conversion remain legally enforceable, with the resulting OPC assuming responsibility for them.
The primary difference lies in the ownership structure. A Pvt Ltd requires a minimum of two shareholders, while an OPC is designed for sole ownership.
Businesses might consider conversion for simplified management, reduced compliance burden, and when transitioning to a single ownership structure aligns with their strategic goals.
The Companies Act, 2013, does not specify a minimum capital requirement for OPCs, providing flexibility for businesses.
