As businesses evolve, their structures often need to adapt to changing goals, ownership, and regulatory environments. One common transition is converting a Limited Liability Partnership (LLP) into a One Person Company (OPC). This article will guide you through the process, highlighting the benefits, eligibility criteria, and steps involved in the conversion.
What is an LLP?
A Limited Liability Partnership (LLP) blends features of both partnerships and corporations. It offers limited liability protection to its partners while allowing for flexible management and operations. However, as businesses grow or change, the need for a more simplified ownership structure often arises, leading many to consider OPCs.
What is an OPC?
A One Person Company (OPC) is a unique form of business entity that allows a single individual to own and operate a company with limited liability. OPCs are ideal for solo entrepreneurs who want the benefits of company status without the complexities of multiple shareholders.
Why Convert from LLP to OPC?
Converting from an LLP to an OPC offers several advantages:
- Simplicity in Management: An OPC is managed by a single person, making decision-making straightforward.
- Limited Liability: Just like an LLP, an OPC protects the owner’s personal assets from business liabilities.
- Increased Credibility: Operating as a company can enhance the business’s credibility with clients, suppliers, and banks.
Eligibility Criteria for Conversion
Before initiating the conversion process, ensure you meet the following criteria:
- The LLP must have only one designated partner.
- All partners must agree to the conversion.
- The LLP should not have any pending litigation or outstanding liabilities.
Step-by-Step Process for Conversion
Here’s how to convert your LLP into an OPC:
Step 1: Pass a Resolution
Begin by convening a meeting with all partners to discuss the conversion. Pass a resolution to convert the LLP into an OPC. Document this decision in the meeting minutes.
Step 2: Obtain Necessary Approvals
Ensure all partners provide their consent for the conversion. You may need to obtain No Objection Certificates (NOCs) from creditors if applicable.
Step 3: Prepare Required Documents
Compile the necessary documents for the conversion process, which typically include:
- LLP Agreement.
- Resolution for conversion.
- Identity and address proof of the designated partner.
- Consent from all partners.
Step 4: File Forms with the Registrar of Companies (RoC)
Submit the required forms and documents to the RoC. The forms may include:
- Form INC-6: Application for conversion.
- Form DIR-2: Consent to act as a Director.
- Form INC-22: Notice of registered office.
Step 5: Pay Applicable Fees
Pay the necessary registration and filing fees, which vary based on the authorized capital of the OPC.
Step 6: Wait for Approval
The RoC will review your application. If everything is in order, you will receive a Certificate of Incorporation for the OPC.
Step 7: Dissolve the LLP
Once you have successfully registered the OPC, the LLP will be dissolved, and it will cease to exist as a legal entity.
To visit: https://www.mca.gov.in
FAQs
1.Why convert from LLP to OPC?
Ans: Businesses may convert to OPC for simpler management, limited liability, and to benefit from company status while having a single owner.
2. What are the eligibility criteria for conversion?
- The LLP must have only one designated partner.
- The partners must agree to the conversion.
- The LLP should not have any pending litigation or liabilities.
3. What is the process for conversion?
- Pass a resolution to convert.
- Obtain approval from all partners.
- File necessary forms with the Registrar of Companies (RoC).
4. What documents are needed for conversion?
- LLP Agreement.
- Resolution for conversion.
- Identity and address proof of the designated partner.
- No Objection Certificates from creditors, if applicable.
5. Is there any fee for conversion?
Ans: Yes, there are filing fees that vary based on the authorized capital of the OPC.
6. How long does the conversion process take?
Ans: The process usually takes 30 to 60 days, depending on the RoC’s processing time and completeness of documentation.
7. Will the LLP’s existing assets and liabilities transfer to the OPC?
Ans: Yes, all assets, liabilities, and contracts of the LLP will automatically transfer to the newly formed OPC.
8. What happens to the LLP after conversion?
Ans: The LLP will be dissolved once the conversion is complete, and it will cease to exist as a legal entity.
