Conversion of Sole Proprietorship Firm to One Person Company

by Sowmiya Narayanan Business Consultant


Sole Proprietorship Firm means ownership rest with a single person. The responsibility and authority of the business enterprise are in the hands of one person. This form of business suits more to the small traders and entrepreneurs with small capital requirements and low level of risks.


·         A Sole proprietorship is not a separate legal entity, the business can be closed at any time when there is any loss or death of the owner. But on the other hand, a One Person Company, cannot be closed as you wish, it has a perpetual succession, a nominee has to be appointed to take care of the company in case of the sudden death of the sole owner, and in his place another member has to be appointed.

·         The business of sole proprietorship firm has involved risk and if they incur any loss, not only the business property would be attracted but also the personal property of the owner comes to threat. On the other hand, in OPC, the owner enjoys limited liability, i.e, the assets of the member would not be attracted if the loss cannot be covered by the company.

·         As a unregistered firm, the Sole proprietorship firm does not has perpetual succession, One Person Company enjoys the benefit of Perpetual Succession.

·         OPC structure would be similar to that of a proprietorship concern without the ills generally faced by the proprietors.

·         In One Person Company the business head is the decision maker, he is not depends on others for suggestions or implementation of suggestions etc., resulting in quicker and easier decision making. He is the sole person who runs the business and hence, the question of consensus or majority opinion etc., does not arise. Similar benefit enjoyed by the Sole Proprietorship Firms.


1.      There is no formal registration available for conversion of Sole proprietorship into One Person Company, only thing you can do is to apply for fresh registration for One Person Company.

2.      A One Person company can be started with two members, one would be the Director and shareholder or the sole owner and the other would be the nominee of the proposed company.

3.      OPC can be registered as a Private Limited Company, where the promoter need to obtain Digital Signature and director Identification before applying for his company name.

4.      The Company name, which should be as per the guidelines laid down by the Ministry of Corporate Affairs, has to be applied to the Registrar of Companies with six names.

5.      The name contains two parts- Prefix and Suffix, a Prefix should be unique and the suffix should reflect the business nature of the proposed company.

6.      After the approval of company name, the final documents such as Memorandum of Association, Articles of Association along with registered office proof has to be submitted to the Registrar of Companies.

7.      If the submitted documents satisfied the RoC, then they would issue the Certificate of Incorporation.

8.      A company registration process is not over after getting a Certificate of Incorporation, the company has to intimate the Registrar of Companies regarding the appointment of auditor of his company within 30 days from the date of incorporation.


The recent introduction of the concept of One Person company, has triggered the small scale business people to enter in to company form of business, where they can enjoy the benefit of Limited Liability, perpetual succession, separate legal entity and more.

The benefit of using this concept are as follows:

1.      Reduced paper works and compliance.

2.      Flexibility of forming a company with single member.

3.      There are provisions made for the conversion of One Person Company into Private Limited Company or Public Limited Company, if there is induction of more members and by amending the MOA & AOA of the Company.


The One Person Company concept holds a bright future for small traders, entrepreneurs with low risk taking capacity, artisans and other service providers. The One Person Company would act as a launch pad for such entrepreneurs to showcase their capabilities in the global arena.

Read more at Conversion of Sole Proprietorship Firm to One Person Company

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About Sowmiya Narayanan Innovator   Business Consultant

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Joined APSense since, October 15th, 2014, From Chennai, India.

Created on Dec 31st 1969 18:00. Viewed 0 times.


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