How to convert an OPC into a Private Limited Company

Introduction about OPC

An One Person Company (OPC) is ideal for an individual who runs a business by himself,wants to have effective control over all functions of the business and work in a corporate framework. Any entrepreneur who requires to forming the company with limited liability should register for OPC. An OPC can be eligible or registration minimum capital of just Rs 1 lakh. But if the paid-up capital(annual turnover) exceeds Rs 50 lakh, then the OPC must be converted to a private limited company or an LLP. The same factor seems true when the OPC’s  average turnover for 3 continuous years exceeds Rs 2 crore. As is the case with registering a private limited company, OPC registration has also been performed an online process by the Ministry of Corporate Affairs. An OPC characteristic suits your requirements best, get the registration process instantly at Solubilis.


One Person Company (OPC), as the name itself it indicates that the one director who is a natural person, and he is necessary to fulfill all the eligibility criteria.Every OPC has a director and its nominee. In our country, an OPC is a best form of a company to increase the strength of the entrepreneurs. A director of an OPC can get the banks loans easily with low rate of interest. Also, he only responsible for the activities of that company. If any losses occurs, the person not supposed to loss his personal asset. In my point of view an OPC raises your business opportunities and growth. If an OPC runs successfully, the annual income rate will be increased. Once the annual turnover of OPC, is more than 20 lakhs, the director will change it into private limited company or Limited Liability Partnership (LLP). A director of an OPC can add the additional directors in the time of conversion.

Conversion of an OPC


 The Conversion of One Person Company into Private Limited Company as per Section 18 of the Companies Act, 2013 and the provisions of Companies (Incorporation) Rules of 2014 should be represented by a newly initiated Private Limited Company. These rules will not affecting the already existing debts, liabilities, obligations or agreements of the already existing OPC. There are two ways of conversion is available for conversion of an OPC into a private limited company. It is voluntary conversion or mandatory conversion. Under both these type of conversions, the requirements are essential alterations in the MOA and AOA of the OPC (As per the provisions provided in section 18 of the Companies Act, 2013, along with section 122 of the Act). The section says to get no objection in written form, from the concerned members and creditors;passing a resolution in support of conversion; and it should also fulfill the requirements of the lowest paid-up capital, along with the least number of members and directors. Generally, for incorporating a private limited company the minimum paid capital recommended is Rs. 1, 00,000 and two members and having minimum of two acting directors. For this Conversion requires you have to fill the Form INC-6, to the Ministry of Corporate Affairs which is governed by the Government of India.

Two Types of Conversion

For converting an OPC into Private Limited Company, the provisions mentioned down in the Section-18 of the Indian Companies Act of 2013, and the Companies (Incorporation) Rules of 2014,in particular the Rule 7(4) of the Companies (Incorporation) Rules, 2014,requires to be followed for both the conditions; voluntary conversion and Compulsory conversion.

Voluntary Conversion

Voluntary conversion into a private limited company is not registered unless two years validity is expired from the date of incorporation of the OPC. Though, if the paid-up share capital is up to rupees 50 lakhs or if its average turnovers up to INR 2 crores within 3 consecutive years, the OPC could change itself into a private limited company. OPC has to communicate voluntary conversion in form INC 5 within sixty days to a registrar of companies. And also people most require registering their OPC rapidly. For converting to a private limited company, OPC is required minimum of have 2 directors and 2 members.

Mandatory/Compulsory Conversion

This is a condition where you want to converse an OPC to private limited company mandatory.  It is why because an One person company has share capital (paid-up) that exceeds Rs. 50 lakhs and the yearly turnover of immediately previous three continuous financial years is maximum of 2 Crores rupees, and then it is mandatory for anyone to conversion. Such company has to mandatorily convert to a private or public limited company within a time period of 6 months from the date when the paid-up share capital exceeded 50 lakhs rupees or the last date of the related period in which the average annual turnover excess to 2 Crore rupees.

The conversion is made by just providing a special resolution in the general meeting. It is checked for a No objection certificate(NOC) in written from the creditors, and the other members before there solution are processed.

a. Intimating to ROC

The appropriated ROC should first be communicated through the specified method that the One person company is now needed for changing itself into a private limited company.

b. Passing the Board Resolutions

The shareholders of the One person company should hold a General Meeting for passing the board resolution for increasing the paid-up capital (if required), number of shareholders, and appointment of directors for meeting the characteristics of the Private Limited Company. For converting an One person company to a Private Limited Company, it should provide at least 2 shareholders and 2 directors.

Furthermore, a board resolution should be send by the shareholders for approving the modification of the Memorandum of Association (MOA) and Articles of Association (AOA) of the One person company.

c. Application for conversion of OPC to Private Limited Company


Once the above steps are completed, the company wants to file an application to the registrar along with a copy of the resolution within fifteen days of sending the resolution. The registrar then ensures on the application needs filled to be correct and fees are being paid against the company registration. Then the registrar makes a decision by finally analyzing the application and other documents thoroughly and provides the certificate of conversion.  Nowadays E-Forms are also available with the Registrar of Companies. There will a penalty is this type of conversion if any officer infringes the provisions of these rules, and will be punished with a fine amounting to Rs.10 thousand and a further fine of one thousand rupees for every day after the first such infringement being continued.

The Advantages of One Person Company into legal system came into greater existence to encourage the entrepreneurs to put a good step into the corporate world. It will not only enable the individual capabilities to contribute economic growth but will also help the youngsters to generate employment opportunity. Finally, the One person company plays a vital role in our nation’s economic growth.

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