Online Procedure to Convert OPC to PVT.
In India, a One Person Company (OPC) allows a single individual to operate a business with limited liability protection. However, the legal framework and regulations around OPCs place certain restrictions. As a result, businesses may choose to Convert OPC to Pvt (Private Limited Company) to expand operations, increase the shareholder base, or fulfill compliance requirements.
To convert an OPC into a private limited company, a special resolution must be passed in a Board Meeting. The company is required to have at least two directors, and creditors must provide a written No Objection Certificate (NOC). After fulfilling other necessary requirements, the OPC can successfully be converted into a private limited company.
To convert your LLP into a private limited company, get in touch with Legal Helpzyn, and rest assured that the entire application process will be completed smoothly and accurately.
When Can an OPC Be Converted Into a Private Limited Company?
According to the Companies Act, 2013, an OPC must be converted into a Private Limited Company in the following cases:
- Voluntary Conversion:
- If the sole member (owner) decides that the business has reached a point where they want to bring in more shareholders or directors, they can voluntarily convert the OPC into a Private Limited Company.
- Mandatory Conversion (Based on Criteria):
- If the annual turnover exceeds Rs. 2 Crores (as per the latest amendments to the Companies Act, 2013).
- If the paid-up share capital exceeds Rs. 50 Lakhs.
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Converting an OPC to a Private Limited Company adds shareholders and meets legal requirements.
Increased Shareholder Base:
- You can introduce more shareholders, which can help raise capital and grow the business.
Limited Liability Protection:
- Both OPCs and Private Limited Companies provide limited liability, meaning the personal assets of the shareholders are protected.
Increased Credibility:
- A Private Limited Company is often seen as more credible by banks, investors, and clients, thus facilitating easier access to funds and business opportunities.
Favorable for Fundraising:
- Private Limited Companies can raise capital through equity investments or debt financing more easily than an OPC.
Transfer of Ownership:
- Shares in a Private Limited Company can be transferred (with restrictions), enabling smooth succession and continuity.
- Form INC-6 (for application of conversion).
- Board Resolution or Special Resolution.
- Statement of Financial Status: Details of the financial position and turnover.
- Altered Memorandum and Articles of Association.
- Copy of Certificate of Incorporation.
- PAN Card and Aadhaar Card of Directors.
An OPC (One Person Company) must meet the following criteria for conversion to a Private Limited Company:
- Annual Turnover: Must exceed Rs. 2 Crores.
- Paid-up Capital: Must exceed Rs. 50 Lakhs.
- Voluntary Conversion: The sole member may opt for conversion if they want to add shareholders or expand the business.
- Mandatory Conversion: Required if turnover exceeds Rs. 2 Crores or paid-up capital exceeds Rs. 50 Lakhs.
Procedure to Convert OPC to PVT.
Ensure the OPC meets the conditions required for conversion, like exceeding the turnover limit or paid-up capital threshold.
- The Board of Directors of the OPC (which can be the sole member in the case of OPC) must pass a resolution to approve the conversion.
- Minutes of the Meeting should be drafted and signed.
If there is more than one person involved in the OPC (such as co-founders), their approval for conversion must be obtained by passing a Special Resolution.
The following documents must be filed with the Registrar of Companies (RoC):
- Form INC-6 (Application for conversion).
- A Board Resolution (if required).
- Declaration by the sole member confirming the compliance with the applicable conditions for conversion.
- Amended Memorandum of Association (MoA) and Articles of Association (AoA) of the new Private Limited Company.
Once the application is submitted, the Registrar of Companies (RoC) will verify the documents. If everything is in order, the RoC will approve the conversion.
Once the application is approved, the RoC will issue a new Certificate of Incorporation for the company, which will officially be converted into a Private Limited Company.
After the conversion:
- The Company’s PAN (Permanent Account Number) and Tax Registration need to be updated.
- New share certificates and documents related to the Private Limited Company need to be created.
- Statutory records such as the register of shareholders should reflect the change.
Differences Between OPC and Private Limited Company
Aspect |
One Person Company (OPC) |
Private Limited Company (Pvt Ltd) |
|---|---|---|
How we work
Team Members Assemble Data
Payment Confirmed!
Request Documents From You
Our CA/CS Will Complete the Online Application for You
Awaiting Confirmation from ROC
We Keep Track of Your Application
Success! OPC conversion to Private Limited Company is complete.
Frequently Asked Questions (FAQs)
1.What is the process to convert an OPC into a Private Limited Company?
The process involves:
- Passing a Board Resolution (and Special Resolution, if applicable).
- Submitting the application in Form INC-6 to the Registrar of Companies (RoC).
- Amending the Memorandum of Association (MoA) and Articles of Association (AoA).
- Obtaining approval from the RoC.
- After approval, the company receives a new Certificate of Incorporation as a Private Limited Company.
2. When is it mandatory to convert an OPC to a Private Limited Company?
It is mandatory if:
- The paid-up capital of the OPC exceeds Rs. 50 Lakhs.
- The annual turnover exceeds Rs. 2 Crores.
3. Can I voluntarily convert my OPC to a Private Limited Company?
Yes, even if you don’t meet the criteria for mandatory conversion, you can choose to convert your OPC to a Private Limited Company if you wish to add more shareholders, directors, or expand your business.
4. How many shareholders are required in a Private Limited Company?
A Private Limited Company must have at least 2 shareholders and can have up to 200 shareholders.
5. How many directors are required for a Private Limited Company?
A Private Limited Company must have a minimum of 2 directors (maximum of 15).
6. What documents are required for the conversion?
- Form INC-6 (application for conversion).
- Board Resolution or Special Resolution.
- Amended MoA and AoA.
- Declaration of Compliance with legal requirements.
- Financial documents like balance sheet and turnover statement.
7. How long does the conversion process take?
The conversion process usually takes around 15-30 days, depending on the complexity and RoC approval time.
8. What are the benefits of converting an OPC to a Private Limited Company?
- Increased shareholder base for raising capital.
- Limited liability protection for shareholders.
- Greater credibility with banks, investors, and clients.
- Ease of business expansion with more shareholders and directors.
9. What happens to the liabilities of the OPC during conversion?
The liabilities of the OPC remain the same after conversion. The company continues its operations and obligations as a Private Limited Company without affecting existing liabilities.
10. Are there any costs involved in the conversion process?
Yes, the conversion process involves legal, filing, and consultancy fees. These can vary depending on professional services and the complexity of the conversion.
11. Can the sole member of the OPC still be a director in the new Private Limited Company?
Yes, the sole member can continue as a director in the Private Limited Company, but they must appoint at least one additional director.
12. Do I need to change the company's name after conversion?
No, the name of the company doesn’t necessarily need to be changed unless it violates naming rules or doesn’t reflect its new structure (Private Limited Company).