Easily Convert Private Limited to OPC

How to Convert Private Limited to OPC?

Converting a Private Limited Company into a One Person Company (OPC) is a strategic move for entrepreneurs who wish to simplify operations and gain full control over their business.

This conversion is permitted under Section 18 of the Companies Act, 2013, and governed by Rule 7 of the Companies (Incorporation) Rules, 2014. It allows a company with two or more shareholders to become a single-owner entity, provided it meets specific eligibility criteria — such as having a paid-up capital of less than ?50 lakh and an annual turnover under ?2 crore.

The process involves board and shareholder approvals, filing of necessary forms with the Ministry of Corporate Affairs (MCA), and updating legal documents. Once approved, the company transitions into an OPC with limited compliance and reduced administrative burden while retaining its corporate structure.

Requirements to Convert Private Limited to OPC

Before starting the conversion process, ensure the following conditions are met:

1. The company should not have any outstanding loans or secured debts, or must have obtained No Objection Certificates (NOCs) from all creditors and members.
2. There must be only one shareholder after conversion.
3. The company should not be registered under Section 8 (non-profit) or involved in investment activities.
4. Updated financial statements (audited balance sheet and profit & loss account) must be available.
5. A special resolution approving the conversion must be passed by shareholders.

Advantages to Convert Private Limited to OPC

Converting a Private Limited Company to an OPC offers several benefits:

1. Sole Ownership & Control: Ideal for single entrepreneurs seeking independence in decision-making.
2. Reduced Compliance: Lower regulatory burdens compared to Private Limited Companies.
3. Simplified Annual Filings: No need for regular board meetings or quorum requirements.
4. Tax Benefits: OPCs may enjoy tax deductions applicable to small businesses.
5. Separate Legal Entity: Despite single ownership, the business retains its corporate identity.

Procedure to Convert Private Limited to OPC

The procedure for converting an Private Limited to OPC involves a series of legal steps, requiring careful documentation and filing. Here’s a breakdown:

1. Hold a Board Meeting
   • Issue notice under Section 173(3) and SS-1 to convene a board meeting.
   • Obtain in-principle approval for conversion.
   • Schedule an Extraordinary General Meeting (EGM).
2. Issue Notice for EGM
   • Send notice under Section 101 and SS-2 to all directors, members, and auditors at least 21 days before the meeting.
3. Obtain No Objection Certificates (NOC)
   • Collect written NOCs from existing shareholders and creditors before passing the special resolution.
4. Conduct the EGM
   • Ensure quorum and presence/consent of the auditor.
   • Pass a special resolution for conversion.
   • Approve alterations in the Memorandum of Association (MOA) and Articles of Association (AOA).
5. File Form MGT-14
   • Submit this form within 30 days of the EGM along with:
   • Copy of special resolution
     Notice of EGM
     Altered MOA & AOA
     Board Resolution (optional)
6. File Form INC-6
   • Once MGT-14 is acknowledged, file Form INC-6 for conversion.
   • Attach:
     Audited financial statements
     NOCs from creditors and members
     Affidavit from directors confirming consent and eligibility
     List of members and creditors

After verification, the Registrar of Companies (ROC) issues a new Certificate of Incorporation, signifying the official conversion.

Documents required to Convert Private Limited to OPC

Prepare and submit the following documents for a smooth conversion:

1. Notice of Board Meeting & EGM
2. Certified copy of Special Resolution
3. Altered MOA & AOA
4. NOCs from all members and creditors
5. List of members and creditors
6. Latest audited financial statements
7. Affidavit from directors
8. Proof of identity and address of directors
9. Form MGT-14 & Form INC-6