How to Convert an OPC into a Private Limited Company
In short
An OPC can convert into a private limited company at any time; since the 2021 amendment there is no waiting period and no turnover or capital trigger. It must have at least two members and two directors, pass a special resolution altering its MoA and AoA, file Form MGT-14 within 30 days and then Form INC-6. The Registrar issues a fresh certificate of incorporation in the new name, and the company keeps its PAN, bank account and contracts.
A One Person Company suits a single founder who wants limited liability. It stops fitting when the business brings in a co-founder, raises equity or wants to grant ESOPs, because an OPC can have only one member. At that point the usual step is to convert it into a private limited company.
When can an OPC convert?
Since 1 April 2021, when the Companies (Incorporation) Rules were amended, an OPC can convert voluntarily into a private or public company at any time.
Before that change, an OPC had to wait two years before converting voluntarily, and had to convert compulsorily once its paid-up capital exceeded ₹50 lakh or its average annual turnover exceeded ₹2 crore. Both the waiting period and the compulsory thresholds were removed, so the decision is now a business one.
What the company needs before converting
- At least two members. New members are usually brought in by allotting fresh shares or by the existing member transferring some shares.
- At least two directors. A second director needs a DIN and consent in Form DIR-2, and is appointed by the board.
- Altered charter documents. The MoA and AoA must be altered to remove the one-person-company clauses, including the nominee clause, and to change the name from "(OPC) Private Limited" to "Private Limited".
- Enough authorised capital for any new shares being issued. If not, authorised capital is increased first.
Step-by-step process
- Board meeting. The board approves the conversion, the altered MoA and AoA, and calls for the member's approval.
- Special resolution. The sole member approves the conversion and the alterations by special resolution. In an OPC this is done by entering the resolution in the minutes book and signing it.
- Form MGT-14. The special resolution is filed with the Registrar of Companies within 30 days.
- Form INC-6. The conversion application is filed with the altered MoA and AoA, the resolution, and the details and consents of the members and directors.
- New certificate. Once satisfied, the Registrar issues a fresh certificate of incorporation in the company's new name.
What changes after conversion
The company remains the same legal entity. It keeps its PAN, TAN, bank account, assets, liabilities and contracts. What changes is its name and class: its letterhead, invoices, website, signboard and seal must show the new name, and the bank, GST registration, tax and other registrations must be updated with the new certificate.
As a private limited company it must now hold at least four board meetings a year (unless it is a small company) and its annual return moves to the form that applies to private companies.
Frequently asked questions
Is there a minimum period before an OPC can convert into a private limited company?
No. Since April 2021 an OPC can convert at any time after incorporation. The earlier two-year waiting period was removed.
Is conversion compulsory once turnover crosses ₹2 crore?
No longer. The compulsory conversion thresholds of ₹50 lakh paid-up capital and ₹2 crore average turnover were removed in 2021. Conversion is voluntary.
Does the PAN change when an OPC becomes a private limited company?
No. The company is the same legal person, so its PAN and TAN stay the same. The PAN record, bank account and other registrations are updated with the new name.
Which forms are filed to convert an OPC?
Form MGT-14 for the special resolution, within 30 days of passing it, and Form INC-6 for the conversion itself. Appointing a second director also needs Form DIR-12, and any share allotment needs Form PAS-3.