Converting a Private Limited Company to an OPC
A One Person Company allows a single individual to enjoy the benefits of a corporate structure with limited liability. Converting a Private Limited Company to an OPC is possible if the company meets the prescribed size thresholds - and in some cases, conversion back from OPC to Pvt Ltd is mandatory.
What Is a One Person Company?
A One Person Company (OPC), introduced under Section 2(62) of the Companies Act, 2013, has a single member (shareholder) and a nominee. The member and the nominee must be natural persons who are Indian citizens and residents. The OPC can have multiple directors beyond the single member.
- Single shareholder: One natural person holds 100% of the shares.
- Nominee: Must be designated at incorporation. The nominee automatically becomes the member if the original member dies or becomes incapacitated.
- Multiple directors permitted: The OPC is not restricted to a single director - additional directors can be appointed.
When Can a Pvt Ltd Convert to OPC?
Conversion is voluntary and initiated by the company. There is no legal compulsion to convert to OPC - it is a choice made when the founder wants to simplify ownership structure or when the company has grown small enough to meet the thresholds.
Eligibility for Conversion (Pvt Ltd to OPC)
Both conditions must be met simultaneously
A Private Limited Company can apply to convert to an OPC only if it satisfies both of the following size thresholds:
| Threshold | Limit |
|---|---|
| Paid-up share capital | ₹50 lakh or less |
| Average annual turnover (preceding 3 financial years) | ₹2 crore or less |
Additionally, one of the existing shareholders must be a natural person who is an Indian citizen and resident - this person becomes the sole member of the OPC.
Conversion Process
Pass a special resolution
The company must pass a special resolution in a general meeting approving the conversion. A special resolution requires at least 75% of votes cast.
Obtain consent of creditors (if any)
Prepare a list of all creditors and debtors as of the date of the resolution. Obtain NOC from creditors if required - creditors who do not object are taken to have consented.
File Form INC-6 with the RoC
File INC-6 on the MCA21 portal within 30 days of passing the special resolution. Attach the special resolution, list of creditors and debtors with amounts, and the NOC from creditors.
RoC issues fresh Certificate of Incorporation
On being satisfied that the application is in order, the RoC closes the existing Pvt Ltd and issues a new Certificate of Incorporation for the OPC with the same CIN but updated particulars.
Restrictions of an OPC
- Cannot raise external equity funding - no angel or VC investment is possible because there can only be one shareholder.
- Cannot be converted to a Section 8 company (non-profit / charitable company).
- Cannot carry out non-banking financial activities, including investment activities.
- The nominee must be designated at incorporation - the nomination cannot be left blank.
- The sole member cannot simultaneously be the member or nominee of more than one OPC.
Mandatory Conversion Back to Pvt Ltd
If an OPC exceeds either of the size thresholds, it must convert to a Private Limited Company - this is not optional.
| Trigger | Action Required | Deadline |
|---|---|---|
| Paid-up capital exceeds ₹50 lakh | Mandatory conversion to Pvt Ltd | Within 6 months of exceeding the threshold |
| Annual turnover exceeds ₹2 crore | Mandatory conversion to Pvt Ltd | Within 6 months of exceeding the threshold |
The same Form INC-6 is used for voluntary conversion from OPC to Pvt Ltd - a founder who wants to bring in a co-founder or expand the shareholding structure can convert voluntarily at any time, regardless of the size thresholds.
Failing to convert when mandatory thresholds are exceeded makes the OPC and its officers liable for penalty. Monitor your paid-up capital and turnover each year and file INC-6 promptly if either threshold is breached.
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