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Conversion of Partnership to One Person Company

Conversion of Partnership to One Person Company

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Conversion of Partnership to One Person Company - Process, Procedure, Document Required, Fees, Eligibility, Duration

When the need arises, a Partnership firm might change to a One Person Company (OPC). Due to issues such as owner's liability, legal status, registration, and credibility, the Partnership might convert the business into an OPC. When a Partnership is changed to an OPC, the company's assets are protected because the owner's responsibility is limited to the value of their share. Partnerships that turn to an OPC also gain legal status because an OPC is a legal framework.

A One Person Company (OPC) is formed by a single individual. The Companies Act of 2013 governs and regulates OPCs. A partnership, on the other hand, is formed by a formal agreement between two or more parties to jointly manage and operate a business. A Partnership is a business arrangement in which two or more persons share earnings and losses. The Indian Partnership Act of 1932 governs and regulates Partnership firms.

Partnership vs. One Person Company

Legal entity: An OPC is a separate legal entity where the owner and the business are two distinct entities. In a Partnership, on the other hand, there is no concept of a separate legal entity. The Partnership and all of its participants are recognized as a single entity.

Liability: In a Partnership, the partners are personally accountable for any losses incurred by the firm. Partners have the drawback of unlimited liability, which means that the liability may extend to the partners' assets. An OPC, on the other hand, is a separate legal entity with limited liability. The sole owner has limited liability up to the amount of the share capital or the value of the company's shares in OPC.

Owner: In an OPC, the owner and the business are two distinct entities, whereas, in a Partnership, the owner and the business are the same.

Registration: A Partnership firm does not need to be registered. A One Person Company, on the other hand, must be registered under the MCA and Companies Act, 2013.

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Conversion of Partnership to One Person Company Frequently Asked Questions

A Partnership that changes to an OPC gains various advantages. They are as follows: • According to the rules of the Companies Act of 2013, registration of an OPC with the MCA (Ministry of Corporate Affairs) is mandatory. A Partnership firm may or may not be registered; it is entirely voluntary to register a Partnership. This offers the OPC an advantage over the Partnership because it establishes the OPC's trustworthiness. • OPCs are private companies that are government-registered. As a result, receiving finance from financial institutions is easier for OPCs than for Partnerships. • In comparison to a Partnership, the OPC provides a more robust corporate structure because they are a legal entity with proper registration. • In a One Person Company, the owner and the business are two distinct entities which mean that it is different from its member. As a result, the members' assets are not accountable for any losses incurred by the firm. So, there are few liabilities in the case of OPCs.
• Every director in an OPC is required to have Director Identification Number. • To file the e-forms online with the MCA, the owner must receive a digital signature certificate and provide the Registrar of Companies with the same. • The person must come up with a name for his business. • After the name has been approved, the director must provide the required papers, which include the Aadhar card, PAN card, the Memorandum of Association, the Articles of Association, the proof of the registered office, etc. • Forms must be filed with the MCA. The papers will be reviewed by the Registrar of Companies. • The director will receive a Certificate of Incorporation after satisfactory verification by the Registrar.

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