Conversion of a proprietorship into a one person company

How does a proprietorship become a one person company?

A proprietorship and its owner are the same person. A one person company is a separate company under section 2(62) of the Companies Act, 2013.

The owner incorporates the OPC. The member must be a natural person and an Indian citizen. The memorandum names a nominee, who becomes the member if the original member dies or becomes incapacitated.

After the certificate, a business-transfer agreement moves the named assets and liabilities to the company. The owner’s liability for new debts of that business then stops at the unpaid amount on the member’s shares.

Who should move a proprietorship into an OPC?

Two plans fit this route:

• One owner who wants limited liability and will not add a second shareholder yet.
• One owner who wants the business to continue through a nominee.

An owner who is adding a co-founder should incorporate a private limited company instead.

Which documents does the move need?

The filing uses two sets of papers.

For the member and the nominee

• PAN, Aadhaar or passport, a photograph and address proof of each
• The nominee’s written consent

For the business

• Proof of the registered office and a no-objection from the property owner
• The proprietor’s latest income-tax return
• A statement of assets and liabilities, and the business-transfer agreement

What are the steps?

Company Suggestion completes the move in four steps.

1. The member takes a digital signature, and the nominee signs the consent.
2. SPICe+ incorporates the one person company and allots PAN and TAN.
3. The proprietor and the company sign the business-transfer agreement.
4. The company opens its bank account. Its own GST registration follows when turnover crosses the threshold.

Related page: One person company registration

Frequently asked questions

4 questions cover the rules that decide this registration.