+91 7305 345 345Private Limited Company to One Person Company
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Converting a Private Limited Company to a One Person Company (OPC) is ideal for entrepreneurs seeking complete control with simplified compliance. This conversion allows a sole member to manage the business while enjoying limited liability and corporate benefits. The process involves obtaining board approval, obtaining shareholder consent, and filing the necessary forms with the MCA. It's a strategic move for reducing operational complexities and regulatory burdens.
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Conversion of Private Limited Company to OPC in India
Converting a Private Limited Company into a One Person Company (OPC) in India is a good move for entrepreneurs seeking greater control and simplified compliance. This conversion is particularly beneficial for businesses with a single stakeholder, as it significantly reduces compliance requirements. There is no need for annual general meetings, and board meetings are limited. Additionally, decision-making becomes faster as it rests solely with the single shareholder. The process of converting a private limited company into an OPC involves holding board and general meetings, passing resolutions, and filing MGT-14 and INC-6 forms with the RoC. Upon successful conversion, the OPC must update all statutory records and regulatory registrations.
What is a Private Limited Company?
A Private Limited Company is a business entity held by private stakeholders registered under the Companies Act, 2013. It restricts the ability to transfer its shares and the liability of the owner only to the extent of the capital contributed to the company.
- A private limited company can have a minimum of two shareholders and a maximum of 200 shareholders.
- The transfer of shares is restricted in a private limited company, i.e., shares cannot be freely transferred to the public or external parties.
- A private limited company cannot invite the public to subscribe to its shares or debentures.
What is an OPC?
A One Person Company (OPC) is a corporate entity designed for solo entrepreneurs. It offers the simplicity of a sole proprietorship with the benefits of limited liability and a distinct legal identity. In an OPC, one natural person is the sole shareholder and director. The nominee must take over in case of incapacity or demise of the owner.
Legal Framework
In India, conversions of companies from one entity to another are governed by Section 18 of the Companies Act, 2013 and Rule 7 of the Companies (Incorporation) Rules, 2014, as amended.
Benefits of Converting a Private Limited Company into an OPC
Converting a Private Limited Company into an OPC provides the following benefits:
1. Lower Compliance Burden:
- There is no requirement to conduct an Annual General Meeting (AGM).
- The requirement to hold Board Meetings is reduced to a minimum of one meeting every six months.
- OPCs are not required to rotate auditors every five years, unlike private limited companies.
2. Limited Liability:
Even after conversion of the Private Limited Company into the OPC, the liability of the shareholders is limited to the extent of the capital invested.
3. Quick Decision Making:
Unlike private limited companies that require consultation between directors or approval from shareholders, an OPC empowers the sole director/shareholder to take quick, autonomous decisions.
4. Tax Benefits:
- No dividend distribution tax
- Only one person is required to sign and file financial statements, board reports, and annual returns
5. Continuity of Business:
An OPC enjoys perpetual succession just like a private limited company. One nominee of the company is appointed during the incorporation to ensure business continuity without disruption.
6. Flexibility in the Business:
While OPCs are ideal for small operations, they are not a long-term limitation. If the business expands to a paid-up capital of ₹50 lakh or an annual turnover of ₹2 crore, the OPC can be easily converted back into a private limited company.
Eligibility for Conversion
- Must be a private limited company (Not a charitable or Section 8).
- Only one natural person can be a shareholder post-conversion (must be an Indian resident for at least 120 days in the previous financial year).
- Paid-up capital must not exceed ₹50 lakh.
- Annual turnover must not exceed ₹2 crore.
- A sole member should not be or intend to be a member/nominee in another OPC.
- Shareholders and creditors must provide written consent.
- Should not hold non-banking financial investment activities like mutual funds or securities.
- The company must not have any outstanding debts or must obtain a No Objection Certificate (NOC) from all creditors.
- Written consent from the members and creditors
- The company must have complied with all provisions of the Companies Act, 2013 and should not be in default in filing financial statements or annual returns.
Documents Required for Conversion
You need the following documents to convert a Private Limited Company into an OPC
- Updated Memorandum of Association (MOA) and Articles of Association (AOA) reflecting OPC status.
- Board resolution calling for EGM and approving MOA/AOA changes.
- Special resolution passed at EGM approving conversion.
- Nominee consent form (a person nominated to take over in certain events).
- List of existing members and creditors, with their No Objection Certificates (NOCs).
- Latest audited financial statements (Balance Sheet and Profit & Loss).
- Minutes of the Board meeting and EGM.
- Affidavit from director
- Confirming no objection from creditors
- Stating compliance with financial limits
- Stamp duty receipt evidencing payment on amended MOA/AOA (varying by state).
- Identification proofs (PAN, Aadhaar, passport, etc.) of the sole shareholder, nominee, and directors.
- Form INC‑3 (nominee consent) and Form INC‑6 for filing conversion.
- Form MGT‑14 submission documents (Notice, resolutions, MOA/AOA amendments).
Forms to be filed
|
Form |
For |
Timeline |
|
MGT-14 |
Filing a special resolution |
Within 30 days of EGM |
|
INC-3 |
Nominee consent |
Before INC-6 filing |
|
INC-6 |
Application for conversion to OPC |
Within 6 months of the FY end |
|
INC-9 |
Director declaration |
Before INC-6 |
|
DIR-2 |
Consent of Directors |
Before INC-6 |
Process of Private Limited Company to One Person Company Conversion
Step 1: Convene a Board Meeting
To approve conversion, amend the MoA and AoA, and call an Extraordinary General Meeting (EGM). In the board meeting, issue the notice at least 7 days prior to all the directors and pass the following resolutions:
- Approve the proposal for conversion into OPC.
- Approve the draft notice of EGM.
- Authorise a director to issue an EGM notice and file forms with the ROC.
Documents needed to be prepared:
- Board Meeting Notice
- Board Resolution
- Draft Notice of EGM
Step 2: Issue the Notice of EGM
Issue the notice to the shareholders, directors, and the auditor of the company.
Contents of the notice
- Date, time, venue, and agenda of the meeting
- Special resolution wording
- Explanatory statement under Section 102 of the Companies Act
Step 3: Hold Extraordinary General Meeting (EGM)
Hold the EGM to:
- Approve the special resolution for the conversion of a Private Limited Company to OPC
- Amend the Memorandum of Association (MOA) and Articles of Association (AOA)
Documents needed to be prepared:
- EGM Minutes
- Attendance Sheet
- Certified Copy of Special Resolution
Step 4: File Form MGT-14 with Registrar of Companies (ROC)
Within 30 days from the date of passing the special resolution file, the MGT-14 with the RoC, along with the following attachments:
- Certified true copy of Special Resolution
- Explanatory Statement under Section 102
- Altered MOA and AOA
- Notice of EGM
- Board Resolution authorising the filing
Note: MGT-14 must be digitally signed by the director and certified by a practising chartered accountant (PCA) or a practising company secretary (PCS).
Step 5: File Form INC-6 with ROC
Once MGT-14 is approved, file INC-6 with the RoC within 6 months from the close of the financial year in which conditions for conversion are met and attach the following documents:
- Certified copy of the Board and Special Resolutions
- Altered MOA and AOA
- Copy of the latest audited financial statements
- List of members and creditors with their consent
- Affidavit from director:
- Confirming no objection from creditors
- Stating compliance with financial limits
- Consent of nominee in Form INC-3
- Declaration from the director in Form INC-9
- Identity and address proof of member and nominee
- NOC from secured creditors (if any)
- List of current directors and their consent (DIR-2)
Note: The form must be digitally signed by the director and certified by a practising chartered accountant (PCA) or a practising company secretary (PCS).
Step 6: Wait for RoC Approval
ROC will examine the application and documents submitted. If the application is complete and compliant, the ROC issues a Fresh Certificate of Incorporation for the One Person Company (OPC).
Step 7: Post-Incorporation Compliance
After receiving the new Certificate of Incorporation:
- Update PAN, TAN, GST registration, Import-Export Code, Shops and Establishment registration, etc.
- Inform the bank and other stakeholders about the conversion.
- Update all statutory records and company communications (letterheads, invoices, board outside premises, etc.).
- Maintain statutory registers under the Companies Act, 2013.
- Conduct business operations as per OPC guidelines (filing of forms, appointment of auditor, etc.).
Why Choose Kanakkupillai for Your Company Conversion?
Choosing the right partner for compliance services is crucial, especially when restructuring your business. Kanakkupillai is your trusted business partner for converting your Private Limited Company into a One Person Company (OPC):
- Specialised Expertise: Our team includes experienced Chartered Accountants, Company Secretaries, and legal professionals who handle conversions regularly and stay updated with the latest MCA regulations.
- Tailored Consultation: We are aware that every company is unique. Our consultants offer tailored advice based on the objectives, future ambitions, and organisational structure of your business.
- End-to-End Process Handling: From eligibility checks and drafting resolutions to ROC filings and post-conversion updates, we manage the entire process so you can focus on your business.
- Accurate Documentation: Our compliance specialists ensure that your MOA, AOA, board resolutions, forms, and affidavits are correctly prepared and legally compliant.
- Fast Turnaround Time: With efficient internal workflows and prompt coordination with ROC offices, we complete most conversions within committed timelines.
Frequently Asked Questions
Can a Private Limited Company convert into an OPC if it has more than one shareholder?
No, a company must have only one natural person who wants to become the sole shareholder and director of the OPC to be eligible for conversion. All other shareholders must transfer their shares to the proposed sole member before the beginning of conversion process. Without this, the conversion cannot proceed under Section 18 of the Companies Act, 2013.Will the company’s existing registrations (like PAN, TAN, and GST) remain valid after conversion into OPC?
Yes, the company retains all its previous registrations such as PAN, TAN, GST, Import Export Code, etc. However, after the conversion, the legal structure and company name change. Therefore, it is mandatory to update these records with the new company name that includes “(OPC) Private Limited.”Is it mandatory to appoint a nominee in an OPC, and can the nominee be a relative?
Yes, appointing a nominee is a legal requirement under the Companies Act. The nominee must be an Indian citizen and a resident of India. A relative can be appointed, but their written consent must be obtained through Form INC-3. The nominee takes over the company’s control in the event of the member’s death or incapacity.Can a Non-Resident Indian (NRI) be the sole shareholder or nominee in an OPC?
No. As per Rule 3(1) of the Companies (Incorporation) Rules, 2014, only a natural person who is an Indian citizen and resident in India (i.e., has stayed in India for 120 days or more during the preceding financial year) is eligible to form or operate an OPC either as a member or a nominee.Will the Company Identification Number (CIN) change after the conversion?
The CIN (Corporate Identification Number) remains the same, as it is unique to the company and not linked to its type. However, the name of the company reflected in the MCA database will change to include the suffix “(OPC) Private Limited”, indicating its new structure.Can an OPC be reconverted into a Private Limited Company in the future?
Yes, reconversion is permitted under Rule 7A of the Companies (Incorporation) Rules, 2014. An OPC can voluntarily convert into a private limited company after two years of incorporation or immediately if its paid-up capital exceeds ₹50 lakhs or average turnover exceeds ₹2 crores.Do I need to reapply for business licenses or trademarks after conversion?
No reapplication is necessary for most licenses or intellectual property like trademarks. However, you are legally required to update the company name in all such registrations (like FSSAI, MSME, trade licenses, GST, IEC) to reflect the new OPC status.What if the company has outstanding debts or secured loans at the time of conversion?
It is mandatory for the company not have any secured debts at the time of conversion. If it does, the company must obtain a No Objection Certificate (NOC) from all secured creditors, stating that they have no objection to the conversion. Without this consent, the ROC may reject the application for conversion.How is decision-making different in an OPC compared to a Private Limited Company?
In an OPC, decision-making is straightforward since there is only one shareholder and director, or sometimes the same person in both roles. There is no need for quorum, voting, or waiting for board/shareholder approvals. This gives the owner the flexibility to take fast and autonomous business decisions without bureaucratic delays.Can an OPC raise funds or bring in additional shareholders in the future?
No, an OPC cannot have more than one shareholder. If the company intends to raise equity capital or induct additional shareholders, it must convert into a private or public company. This conversion can be done voluntarily once business growth demands scaling or investment.What makes Us Different
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