Convert OPC to Private Limited Company: A Step-by-Step Guide
Converting a One Person Company (OPC) into a Private Limited Company is a strategic move that enables businesses to scale operations, attract investments, and add shareholders. While OPCs are ideal for solo entrepreneurs in the early stages, transitioning to a private limited structure provides greater flexibility, access to funding, improved credibility, and compliance advantages. This conversion is governed under the Companies Act, 2013, and allows businesses to grow beyond ownership limitations while maintaining legal continuity and brand identity.
The Companies (Incorporation) Second Amendment Rules, 2021 allows an OPC to voluntarily convert into a Private Limited Company at any time, without any turnover or paid-up capital threshold. This change is a smart choice for entrepreneurs seeking more flexibility, funding opportunities, and scalability.
In this guide by LegalBabu, a leading consultant in business registration and conversion services in India, we explain everything you need to know about converting your OPC into a Private Limited Company & including requirements, procedure, documents, and more.
Requirements for Converting OPC to Private Limited Company
To convert a One Person Company (OPC) into a Private Limited Company, the following requirements must be fulfilled as per the Companies Act, 2013:
- A Private Limited Company must have at least 2 shareholders (maximum 200).
- At least 2 directors are required. One director can be common with the OPC.
- Valid DSC of all directors and shareholders must be available.
- All proposed directors must possess a valid DIN.
- New shareholding pattern and consent of shareholders must be finalized.
- Resolutions from the Board and Member approving conversion are required.
- The Memorandum and Articles of Association must be altered to reflect the new structure.
- The OPC must have complied with all ROC filings and not be in default.
- Relevant forms like INC-6 (voluntary conversion), MGT-7, and AOC-4 must be filed as applicable.
- No objection certificate from creditors or other stakeholders, if applicable.
Advantages of Converting OPC to Private Limited Company
Converting a One Person Company (OPC) into a Private Limited Company offers multiple benefits that support business growth, funding, and operational flexibility:
- Multiple Shareholders: Enables the inclusion of up to 200 shareholders, allowing shared ownership and partnership opportunities.
- Easier Fundraising: Attracts venture capital, angel investors, and private equity—a crucial advantage for startups and growing businesses.
- Improved Credibility: A private limited company enjoys higher trust and recognition among customers, vendors, and financial institutions.
- Business Expansion: Offers greater scope for scaling operations, entering joint ventures, or forming subsidiaries.
- Separate Legal Entity: The company remains a distinct legal entity from its owners, ensuring continuity and limited liability.
- Perpetual Succession: The business continues to exist regardless of changes in ownership or management.
- Employee Attraction: Ability to issue stock options (ESOPs) to attract and retain top talent.
- Global Reach: Easier to collaborate with foreign investors or partners under a private limited framework.
Procedure to Convert OPC to Private Limited Company
The conversion of a One Person Company (OPC) to a Private Limited Company involves several legal steps under the Companies Act, 2013. Here’s a simplified, step-by-step process:
- Step 1: Board Meeting
- Call a Board Meeting to:
- Approve the conversion
- Fix the date for an Extra-Ordinary General Meeting (EGM)
- Approve the draft Memorandum of Association (MOA) and Articles of Association (AOA)
- Step 2: Obtain Shareholder’s Consent
- Hold an EGM to pass a special resolution for:
- Conversion of the OPC
- Appointment of additional director(s) and shareholder(s), if required
- Alteration of MOA & AOA
- Step 3: File Special Resolution with ROC
- File Form MGT-14 within 30 days of passing the special resolution.
- Step 4: File Conversion Application
- File Form INC-6 with the Registrar of Companies (ROC), along with:
- Altered MOA & AOA
- Board & Shareholder resolutions
- Consent letters of new directors/shareholders
- List of proposed members & directors
- Step 5: ROC Verification & Approval
- ROC reviews the application and, if satisfied, issues a fresh Certificate of Incorporation reflecting the company as a Private Limited Company.
Documents Required to Convert OPC to Private Limited Company
Here is the complete list of documents needed for converting a One Person Company (OPC) into a Private Limited Company:
Company & Legal Documents:
- Certificate of Incorporation of the OPC
- Memorandum of Association (MOA) & existing and proposed (altered)
- Articles of Association (AOA) & existing and proposed (altered)
- Board Resolution for conversion
- Special Resolution passed at EGM
- Notice of EGM with explanatory statement
Shareholders & Directors Documents:
- Consent of Director(s) in Form DIR-2
- Identity Proof of new shareholders and directors (PAN, Aadhaar, Passport)
- Address Proof (Utility bill/Bank statement not older than 2 months)
- DIN (Director Identification Number) of all directors
- Digital Signature Certificate (DSC) of all directors and authorized signatory
ROC Compliance Documents:
- Form MGT-14 (filing of special resolution)
- Form INC-6 (application for conversion)
- List of Proposed Directors and Shareholders
- Declaration by Directors that the company has no pending dues or litigation
- NOC from Creditors (if applicable)
FAQS
FAQs on Conversion OPC to Private Limited
To know more about the conversion from OPC to Private Limited, we have it covered for you:
-
Can I convert OPC to Private Limited voluntarily before turnover crosses the limit?
Yes, voluntary conversion is allowed anytime after 2 years from incorporation, even if thresholds are not crossed.
- What is the mandatory conversion threshold for OPC?
- Is government approval required for conversion?
- Will my CIN (Company Identification Number) change after conversion?
- Do I need a new PAN for the converted company?
- Will the GST registration also change after conversion?
- Can the same bank account be used post-conversion?
- Is there any capital requirement for converting to a Private Limited Company?
- Can I add a foreign national as a shareholder during conversion?
- Do I need to inform other government departments post-conversion?
- What happens to the OPC nominee after conversion?
- Is stamp duty applicable during conversion?
- How long does the entire conversion process take?
- Do I need to file annual returns again after conversion?
- Will the business contracts signed earlier remain valid?
- Do I need a new MOA and AOA for the private limited company?
- Will my OPC registration number or date of incorporation change?
- Is conversion possible if the OPC has loans or liabilities?
- Can I convert OPC into LLP instead of Private Limited?
