How to convert an OPC Company to Private Limited Company

The introduction of an OPC through the Companies Act, 2013, was targeted at helping single entrepreneurs register a company. While an OPC offers benefits similar to a private company, it has certain drawbacks too. Hence, the option of converting a One Person Company to a Private Limited Company was kept open. Today, we will look at how you can convert an OPC Company to Private Limited Company along with the forms and rules involved.

opc company to private limited company

OPC Company to Private Limited Company – Types of Conversion

There are two ways of converting a one-person company to a private limited company:

  1. Mandatory Conversion
  2. Voluntary Conversion

Mandatory Conversion

A one-person company is mandatorily required to convert to a private limited company if:

  • Its paid-up share capital exceeds Rs.50 lakh; AND
  • The average annual turnover during the period of immediately preceding three consecutive financial years exceeds Rs.2 crore.

In such cases, the OPC Company to Private Limited Company conversion is compulsory within six months from the date on which the OPC exceeds these limits. The OPC also needs to pass a special resolution in the general meeting and obtain a no-objection certificate from creditors and other members and make an application in Form INC-6 within 6 months from the effective date on which the above threshold limit was exceeded.

Voluntary Conversion

A company cannot voluntarily convert into any other entity until it completes two years after the date of incorporation. After this period, it has the option to convert. Also, to apply, you need to file Form INC-6 within 30 days of voluntary conversion. Further, you must increase the number of directors and shareholders as per the rules.

The process to convert an OPC Company to Private Limited Company

Here is a five-step process to convert an OPC Company to Private Limited Company:

I. Inform the Registrar of Companies

The first step involves intimating the concerned Registrar of Companies regarding the conversion in form INC-5. Further, there is a prescribed procedure that the OPC must follow. The idea is to let the Registrar know about the fact that you intend to convert your one-person company to a private limited company.

II. Resolutions

After intimating the Registrar, you must pass the required resolutions. The resolutions include:

  1. Approval of the Board for such conversion and convening of General Meeting.
  2. Approval shareholders for converting the One Person Company to Private Limited Company
  3. Alteration of the Articles of Association of the OPC
  4. Also, alteration of the Memorandum of Association of the OPC
  5. Appointing additional directors and shareholders in the company
  6. If needed, then approval for increasing the capital of the company.

III. File Form MGT-14

Within 30 days of passing the resolution at the General Meeting, the OPC must file the resolution with the Registrar of Companies via Form MGT-14. The OPC needs to attach certified copies of the resolution and the minutes of the meeting.

IV. Application for conversion from OPC Company to Private Limited Company

On completing these steps, you must file an application with the Registrar of Companies along with a copy of the resolution form INC-6. Further, file this within 6 months of mandatory conversion and 30 days of voluntary conversion, as the case may be. You also need to pay the fees. The Registrar studies the application and other documents before issuing the certificate of conversion. If any officer contravenes the rules, then he is liable to pay a fine.

Summing Up

Here you have it – the process to convert OPC Company to Private Limited Company. Remember, if you have an OPC and have crossed the limits specified above, then you must compulsorily file for conversion. We hope that this article helped you understand the process well. If you are looking for a One Person Company registration and/or Private Limited Company registration, then drop us a line. Our team will be glad to assist you. Good Luck!



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