A one-person company or OPC is defined as a company that has only a person as to its member. The other members of the company are just the subscribers to its memorandum of association or its shareholders.
It has only one shareholder as its member. Entrepreneurs with business at early stages prefer to form an OPC, upon passing certain criteria they can convert to a private limited company (PLC). You can know about complete guide to company registration in Vietnam online if needed.
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The private limited is among the most preferred forms of businesses, owing to the numerous features attached to it.
This type of business entity limits the owner liability to their shares and the maximum number of shareholders can be 50. Also, it restricts public trading of shares by shareholders and there is perpetual succession.
An existing company can convert from OPC to Private Limited Company either voluntarily or mandatorily. In both cases, the step by step process has to be followed with the fulfillment of all the requirements.
Eligibility for conversion:
An OPC can convert to Private Limited due to the following reasons:
When the paid-up capital of the OPC becomes more than Rs. 50 lakhs.
When the turnover for three consecutive financial years of the company surpasses Rs. 2 crores.
Given below is a brief discussion about the voluntary and involuntary process, for ease of understanding.
Section 18 of the Companies Act deals with the voluntary process of conversion of an OPC to a Private Limited Company.
The process of conversion is initiated only after 2 years of being an OPC. After this period, the conversion to Private Limited Company can be done under the same act, by the modification of MOA and AOA.