Conversion of Pvt Ltd to OPC/LLP

Advantages of Conversion from Pvt Ltd to OPC:

1. Simplified Decision-making: With only one director and shareholder in an OPC, decision-making becomes more streamlined as there is no need for holding annual general meetings or obtaining consensus from multiple shareholders. The owner can make independent decisions.
2. Sole Ownership of Profits: The shareholder of an OPC enjoys the advantage of 100% ownership of the net profit. There is no need to share the profits with other shareholders, as there is only one owner.
3. Reduced Compliance Requirements: OPCs have fewer compliance obligations compared to private limited companies. For example, there is no requirement to prepare a Cash Flow Statement as part of the financial statements, reducing the burden of reporting.
4. Convenient Passing of Resolutions: Resolutions, whether Special or Ordinary, can be passed by the sole member of the OPC through communication and entry into the minute book. This simplifies the decision-making process without the need for formal meetings.
5. Single Director’s Signature: If there is only one director on the Board of an OPC, the financial statements are required to be signed by that single director, reducing the administrative burden.

Advantages of Conversion from Pvt Ltd to LLP:

1. Increased Flexibility: LLPs offer more freedom and flexibility in terms of internal management compared to companies. The partners can mutually agree upon the rules and regulations governing the LLP, allowing for customized decision-making processes.
2. Reduced Compliance Burden: LLPs have fewer compliance obligations compared to companies. The compliance requirements for LLPs are generally simpler and less time-consuming, making it easier to manage the administrative aspects of the business.
3. Audit Exemption: LLPs with an annual turnover below Rs. 40 lakhs and a capital investment below Rs. 25 lakhs are not required to undergo a mandatory audit of their accounts. This exemption helps in reducing audit-related costs for smaller LLPs.
4. Simplified Tax Structure: LLPs are subject to income tax only, while companies face taxation on dividends received by shareholders. The tax structure for LLPs is generally more straightforward and eliminates the need for a dividend distribution policy.
5. Easy Capital Withdrawal: Partners in an LLP can withdraw their capital by submitting a simple letter, providing flexibility in managing their investments. Unlike in companies, withdrawing capital from an LLP does not have significant tax implications.

Overall, the advantages of converting from a Pvt Ltd to an OPC or LLP include simplified decision-making, increased ownership control, reduced compliance obligations, and flexibility in management and taxation.

Checklist/Requirements for Conversion of Pvt Ltd to OPC:

1. Copy of Board resolution approving the conversion.
2. Copy of the altered Memorandum of Association (MOA) and Articles of Association (AOA) reflecting the change to OPC.
3. Declaration from directors stating that the company meets the eligibility criteria for OPC conversion.
4. No Objection Certificate (NOC) from creditors acknowledging the conversion.
5. Copy of NOC from shareholders consenting to the conversion.
6. Audited financial statements of the Pvt Ltd company.

Checklist/Requirements for Conversion of Pvt Ltd to LLP:

1. Consent of each shareholder of the company for the conversion, in the prescribed format.
2. Incorporation document in Form Fillip, which includes details of partners, capital contribution, and LLP agreement.
3. Form 3 – Application and declaration of incorporation of an LLP.
4. Clearance or no-objection certificate from tax authorities.
5. Statement of assets and liabilities of the company.
6. List of all the creditors along with their consent for the conversion.
7. Approval, if required, from any other relevant authority or country.
8. Authorization to make a declaration regarding compliance with conversion requirements.
9. Optional attachments, if any, as required by the relevant authority.

Please note that the specific requirements may vary depending on the jurisdiction and applicable laws. It is advisable to consult with a professional to ensure compliance with all the necessary regulations during the conversion process.

Process of Conversion from Pvt Ltd to OPC:

1. Conduct a Board Meeting: Hold a board meeting and pass a resolution approving the conversion of the Pvt Ltd company into an OPC.
2. Conduct an Extra-Ordinary General Meeting (EGM): Call for an EGM and obtain the approval of shareholders for the conversion.
3. File MGT-14: File Form MGT-14 with the Registrar of Companies (ROC) within 30 days of passing the resolution at the EGM.
4. File for Conversion: Prepare the necessary documents, including the altered Memorandum of Association (MOA) and Articles of Association (AOA) reflecting the change to OPC. File the required forms, such as INC-6 (Application for Conversion of a Private Company into an OPC), with the ROC.
5. Conversion to OPC: Once the ROC verifies and approves the documents, they will issue a Certificate of Incorporation reflecting the conversion of the Pvt Ltd company to an OPC.
6. Issue of Share Certificate: Issue new share certificates to the shareholder(s) of the OPC, reflecting their ownership in the converted OPC.

Process of Conversion from Pvt Ltd to LLP:

1. Hold a Board Meeting: Conduct a board meeting and pass a resolution approving the conversion of the Pvt Ltd company to an LLP.
2. Application for Name Availability for the LLP: Apply for the availability of the desired LLP name through the RUN-LLP (Reserve Unique Name – Limited Liability Partnership) service provided by the Ministry of Corporate Affairs (MCA).
3. File e-Form: Prepare the necessary documents, including the consent of each shareholder for the conversion. File the e-Form Fillip (Form for incorporation of LLP) with the ROC.
4. Filing of Application for Conversion: Prepare and file the necessary documents, including Form 3 (Application and Statement for the conversion of a company into LLP) with the ROC. This form includes details of partners, capital contribution, and LLP agreement.
5. Get Certificate of Incorporation as LLP: After verifying the documents, the ROC will issue a Certificate of Incorporation as an LLP, confirming the conversion of the Pvt Ltd company.
6. Filing of E-Form-3: File e-Form-3 (Information with regard to Limited Liability Partnership Agreement and changes, if any) with the ROC within 30 days of the conversion to update the LLP agreement and provide any necessary changes.

Please note that this is a generalized overview of the conversion process, and the specific steps and requirements may vary based on the jurisdiction and applicable laws. It is advisable to consult with a professional to ensure compliance with all the necessary procedures during the conversion process.

Key Deliverables for Conversion of Pvt Ltd to OPC:

1. Incorporation Certificate: A new Incorporation Certificate will be issued by the Registrar of Companies (ROC) reflecting the conversion of the Pvt Ltd company into an OPC.
2. Updated MOA and AOA: The Memorandum of Association (MOA) and Articles of Association (AOA) of the company will be altered and updated to reflect the change in the company structure to an OPC.
3. Share Certificates: New share certificates will be issued to the shareholder(s) of the OPC, representing their ownership in the converted OPC.

Key Deliverables for Conversion of Pvt Ltd to LLP:

1. Incorporation Certificate: The Registrar of Companies (ROC) will issue a new Incorporation Certificate confirming the conversion of the Pvt Ltd company into an LLP.
2. LLP Deed: A Limited Liability Partnership (LLP) Deed will be prepared and executed, outlining the rights, duties, and obligations of the partners and governing the internal management of the LLP.

Please note that these key deliverables may vary based on the jurisdiction and specific requirements. It is important to consult with a professional.