Converting OPC to to PLC: Costs and Advantages

Converting a One Person Company (OPC) into a Private Limited Company (Pvt Ltd) can be a significant step for entrepreneurs looking to expand their business. This article delves into the cost of converting OPC to Pvt Ltd, including the procedure for conversion of opc into private company, the fees associated with the conversion, as well as the benefits of making this change.

Understanding OPC and Pvt Ltd Structures

What is an OPC?

A One Person Company is a type of business entity that allows a single individual to operate a company with limited liability. This structure is particularly beneficial for solo entrepreneurs as it combines the benefits of sole proprietorship with the limited liability of a corporation.

What is a Private Limited Company?

A Private Limited Company, on the other hand, allows multiple shareholders and is often preferred for businesses looking to raise capital, attract investors, or expand operations. The transition from an OPC to a Pvt Ltd can enhance credibility and also facilitate growth.

Cost Breakdown for Converting OPC to Pvt Ltd

The cost of converting OPC to Pvt Ltd involves several components. Here’s a detailed breakdown:

1. Government Filing Fees

The first cost of converting opc to pvt ltd is government filing fees. These are mandatory expenses associated with the conversion process. These typically include forms such as:

• Form INC-5: Notice of conversion – ₹500
• Form INC-6: Application for conversion – ₹500
• MGT-14: Filing of special resolution – ₹500

This totals approximately ₹1,500 in government fees alone.

2. Professional Fees

In addition to government fees, another cost of converting opc to pvt ltd is professional fees for legal and consultancy services can vary widely based on the service provider. Generally, these fees range from ₹15,000 to ₹25,000 depending on the complexity of the conversion as well as additional services required.

3. Administrative Costs

Administrative costs may include expenses related to obtaining necessary documents such as:

• No Objection Certificates (NOCs) from creditors
• Updated Memorandum and Articles of Association
• Audited financial statements

These costs can add another ₹5,000 to ₹10,000 depending on your specific circumstances as well as whether you require external assistance.

Summary of Costs

Cost Component	Estimated Amount (INR)
Government Filing Fees	1,500
Professional Fees	15,000 – 25,000
Administrative Costs	5,000 – 10,000
Total Estimated Cost	21,500 – 36,500

Procedure for Conversion of OPC into PLC

The procedure for Conversion of OPC into Private Company involves several steps, such as:

Step 1: Evaluate Eligibility

Before initiating the conversion process, ensure that your OPC meets the eligibility criteria:

• The OPC must have been operational for at least two years unless it exceeds certain financial thresholds (paid-up capital over ₹50 lakhs or turnover exceeding ₹2 crores) which previously mandated conversion but are no longer compulsory as per recent amendments.

Step 2: Prepare Necessary Documents

Gather all required documents such as:

• Latest audited financial statements
• NOC from creditors
• Altered Memorandum and Articles of Association

Step 3: Pass a Special Resolution

You must pass a special resolution in a general meeting to approve the conversion. This requires:

• Increasing the number of directors as well as members to at least two each.

Step 4: File Required Forms

Submit the following forms to the Registrar of Companies (ROC) via the MCA website:

• Form INC-5: Notice of conversion
• Form INC-6: Application for conversion
• MGT-14: Filing of special resolution

Ensure that these forms are filed within specified time frames—within 30 days for voluntary conversions and within six months for compulsory conversions if applicable.

Step 5: Await Approval

Once submitted, await confirmation from the ROC regarding your application. Upon approval, your OPC is officially now a Pvt Ltd company.

Benefits of Converting OPC to Pvt Ltd

Converting an OPC into a Pvt Ltd offers several advantages:

1. Limited Liability Protection: Shareholders’ liability is limited to their shareholding.
2. Increased Credibility: A Pvt Ltd status enhances trust among clients and also investors.
3. Attracting Investment: Easier access to funding through equity financing.
4. Operational Flexibility: More options in terms of management structure as well as operations.

Conclusion

Thus choosing to convert an OPC to Pvt ltd involves understanding various key aspects. Knowing the procedure for conversion of opc to plc and fees involved, entrepreneurs can successfully navigate this transition as well as position their businesses for future growth. This conversion can lead to great success for the business, as long as it’s done properly and carefully!