Reasons and Steps to Convert Sole into One Person Company!
It is very usefulfor small investors as it requires less capital investment and easy starting.The profit earned by this type of business belongs only to the owner and heonly is responsible for any debt or loss. But, in case of loss, the amountrecovery is done by the personal funds and assets of the owner. In case ofdeath or injury of owner, the business cannot be carry on.
One Person Company
The one personcompany also has single ownership and it was introduced few years back forencouraging small scale businesses and start-ups. It has minimum maintenancecost and a separate identity. Also it has limited liability owing to which ithas become popular form of business.
Benefits to convert sole into one person company:
It offers a separatelegal identity which allows protection of personal assets.
The limitedliability of the business provides possession of limited amount of shares inthe company, hence limited loss in case of company losses.
The one personcompany is easy to manage as there are no requirements of annual meetings orgeneral meetings. Also, complete authority is under one person for decisions.
Big companies preferto work with OPC as it is similar to private limited. It creates trust andcredibility of the company. Also it improves confidence of suppliers andcustomers.
It has betterchances of obtaining funding from the financial institutions.
It is well-organizedsector with limited liability.
In this, the owner is directly liable for all the profits orlosses. This form of business does not require any legal formalities; hence itis considered a highly convenient form of business for small investors.
Process to convert a Sole Proprietorship into One Person Company
Step 1-Getting Director Identification Number of the company director with DIR-3form.
Step 2–Obtaining Digital Signature Certificate of online filing of application
Step 3 –Filingthe application for name approval of company
Step 4–Preparing Memorandum of Association and Articles of Association for filing.
Step 5 –Signand File essential documents that includes MoA and AoA in various e-forms forcompany registration
Step 6 – Aftercomplete investigation the Certificate of Incorporation is obtained from Registrarof Companies
Documents critical for the conversion:
- Address Proof of director and nominee. (not older than 2 months)
- Proof of Identity all nominees and directors.
- Approval of Nominee by the Registrar of Companies (RoC).
- Proof of Registered Office.
- Passport Photograph of the directors and nominee.
