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Process for Conversion of an OPC into Private Limited Company

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Divya Singhvi

Alter MOA
Conversion of OPC
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OPC
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Last updated on May 5th, 2021

Conversion of an OPC to Private Limited Company can be voluntarily or by compulsion. In both the cases, there is a need to follow proper procedure. And shall require necessary alterations in the MOA and AOA of the OPC. However, it may be noted that the conversion of an OPC into a Private Limited Company as per Section 18 of the Companies Act, 2013 and the rules of Companies (Incorporation) Rules of 2014, shall not affect the existing debts, liabilities, obligations or contracts of the OPC. In addition, these will inevitably be discharged by the newly formed private limited company. Further, there may be two scenarios to convert OPC into Pvt Ltd Company.

  1. Compulsory Conversion
  2. Voluntary Conversion
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Compulsory Conversion of an OPC into Pvt Ltd

It is mandatory for an OPC to convert into a Pvt Ltd Company within 6 months if it surpasses the below-given parameters:

  1. Paid up share capital of an OPC exceeds Rs.50 lakhs and
  2. Average annual turnover of immediately preceding three consecutive financial years exceeds 2 crores.

During the conversion, the members have to just pass a special resolution in the general meeting. Further, obtain No Objection Certificate from creditors and other members before passing the resolution.

Process for Compulsory Conversion

  1. Convene a general meeting and pass Resolution for increase in the number of Directors and shareholders.
  2. For converting an OPC to a Private Limited Company, there should be at least 2 shareholders and 2 directors.
  3. Furthermore, shareholders shall pass a resolution for approving the alteration of the Memorandum of Association (MOA) and Articles of Association (AOA) of the OPC.
  4. File E- form INC-5 with ROC within 60 days of exceeding threshold limits, informing that it has ceased to be OPC. And now it requires to convert itself into a private company.
  5. Further file E-Form INC-6 on the MCA Website within 6 months of conversion.
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Voluntary Conversion

FAQs

Can OPC appoint Members before to meet the minimum compliance requirement of Private Company before conversion?

No, the One Person Company can have only one member and therefore the Company cannot increase the members before conversion. However, after conversion, it shall increase the number of members to meet the minimum compliance requirement.

What is the effect after conversion of OPC to a private limited company on the liabilities of previous company?

The conversion shall not affect, the liabilities, debts or obligation of the company in any way. Therefore, the company shall be liable for all its previous obligations.

Got Questions? Ask Away!

  1. Hey @Dia_malhotra

    It is mandatory for an OPC to convert into a Private Limited Company within 6 months if it surpasses the below-given parameters:

    1. Paid up share capital of an OPC exceeds Rs.50 lakhs and
    2. Average annual turnover of immediately preceding three consecutive financial years exceeds 2 crores.

    You can read the entire process of conversion of an OPC to Pvt Ltd Co. here:

    Here are the key differences between a Private Limited Company and an OPC

    Hope this helps!

  2. Hello @CSDEV999

    Conversion of OPC to any other Company is only possible by way of:

    1. Voluntary Conversion: If two years have surpassed since incorporation, an OPC can voluntarily convert.
    2. Compulsory Conversion: If paid up share capital exceeds Rs. 50 lakhs or average turnover exceeds Rs. 2 crore.

    Hence, in your case it is not possible to convert the OPC to a Pvt Ltd Co., since none of the above-mentioned conditions are satisfied.

    Hope this helps!

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