As per section 2(68) of Companies Act 2013 “private company” means a company which by its articles, —
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred:
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that—
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased,
shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company;
As pe Section 2(62) of Companies Act 2013, “One Person Company” means a company which has only one person as a member.
Converting a One Person Company (OPC) into a Private Limited Company (Pvt Ltd) is governed by the Companies Act, 2013 and requires approval from the Ministry of Corporate Affairs (MCA). The process includes board approvals, filings, and compliance steps.
1. Eligibility for Conversion
You can convert an OPC into a Pvt Ltd company under two conditions:
- Voluntary Conversion (Before 2 Years of Incorporation):
- Allowed only if paid-up share capital exceeds ₹50 lakh OR annual turnover exceeds ₹2 crore (as per the latest financial statement).
- Otherwise, OPC must wait two years from incorporation to convert voluntarily.
- Mandatory Conversion (After 2 Years of Incorporation):
- An OPC must convert to a Pvt Ltd company if its paid-up capital exceeds ₹50 lakh or turnover exceeds ₹2 crore in any financial year.
- The company has six months to complete the conversion process.
2. Steps for Conversion of OPC into Private Limited Company
Step 1: Board Meeting & Resolution
- Hold a Board Meeting and pass a resolution to initiate the conversion.
- Authorize a Director or Company Secretary (CS) to file necessary applications with MCA.
- Decide on adding at least one more shareholder and increasing the number of directors to at least two, as a Pvt Ltd company must have minimum 2 shareholders and 2 directors.
Step 2: Alter Memorandum & Articles of Association (MOA & AOA)
- Modify the MOA & AOA to reflect the change from an OPC to a Private Limited Company.
- Remove provisions related to nominee director (which is mandatory for OPCs).
- Include changes in shareholding structure and company name (from "OPC Pvt Ltd" to "Pvt Ltd").
Step 3: File Form MGT-14 (Approval for Special Resolution)
- File MGT-14 with MCA within 30 days of passing the special resolution.
- Attachments:
- Certified Board Resolution & Special Resolution
- Altered MOA & AOA
- Notice of EGM (if held)
Step 4: File Form INC-6 (Application for Conversion)
- File Form INC-6 with MCA for official conversion.
- Required documents:
- Copy of Board Resolution
- Altered MOA & AOA
- List of proposed directors & shareholders
- Latest financial statements (if required for mandatory conversion)
- NOC from creditors (if applicable)
- Consent of existing shareholder and nominee (if applicable)
- MCA reviews the application and issues a Certificate of Incorporation (COI) confirming the conversion.
Step 5: Update Business Documents & Registrations
- Apply for a new PAN and TAN (if required).
- Update bank accounts, GST, and other registrations with the new company name.
- Inform clients, suppliers, and government authorities about the conversion.
3. Compliance After Conversion
- Appoint a Statutory Auditor (if not already appointed).
- Conduct Board Meetings and maintain compliance as per Pvt Ltd company regulations.
- File Annual Returns (MCA & Income Tax) as per Pvt Ltd requirements.
4. Timeline for Conversion
- Board Meeting & Resolutions: 2-3 days
- Filing MGT-14: Within 30 days of resolution
- Filing INC-6 & MCA Approval: 15-20 days (varies)
- Total Process Time: 30 to 45 days
1. Cost of Converting an OPC into a Pvt Ltd Company
Converting a One Person Company into a Private Limited Company in India involves various costs, including government fees, professional charges, and compliance costs. The total cost depends on factors like authorized capital, state of incorporation, and professional fees. Here's a breakdown:
1. Professional Fees:
Hiring a Company Secretary (CS) or Chartered Accountant (CA) is essential for legal drafting, filings, and compliance. Their fees range depending on complexity & professional.
2. ROC (Registrar of Companies) Filings:
Various forms need to be filed with the Ministry of Corporate Affairs (MCA):
- MGT-14 (For Board Resolution) – based on Authorized capital
- INC-6 (Application for Conversion) – based on Authorized capital
- Other filings – ₹1,000 to ₹3,000
3. Other Miscellaneous Costs:
- Stamp Duty – Varies by state (₹1,000 to ₹5,000)
- PAN & TAN (amendment) – ₹150 to ₹300
- MOA & AOA Amendment – ₹3,000 to ₹5,000
Conclusion
Converting a One Person Company (OPC) into a Private Limited Company (Pvt Ltd) is a structured process governed by the Companies Act, 2013. The conversion can be voluntary (after two years of incorporation) or mandatory (if turnover exceeds ₹2 crore or paid-up capital exceeds ₹50 lakh).
The process involves passing board resolutions, altering the MOA & AOA, filing necessary forms (MGT-14 & INC-6) with the Registrar of Companies (ROC), and updating business registrations. The entire procedure takes around 30 to 45 days and costs depending on compliance and professional, fees.
Post-conversion, the company must comply with Pvt Ltd regulations, such as maintaining at least two directors and shareholders, appointing an auditor, and ensuring annual filings. The conversion offers benefits like greater funding opportunities, business expansion, and limited liability protection, making it a beneficial move for growing businesses.
