Convert One Person Company to Private Limited

In a short period of time, the concept of One Person Company (OPC) has become extremely popular as it encourages entrepreneurship among businesses that are managed by a single owner. As per Section 18 of the Companies Act, 2013, a One Person Company (OPC) can be legally converted into a Private Limited at any point of time.

The rules of Companies Rules of 2014 shall not make any changes to the running debts, liabilities, obligations or contacts of the OPC and these elements will inevitably be cleared by the newly created Private Limited Company. The conversion is made by making necessary changes in the MOA and AOA of the OPC.

A special resolution in regard to this conversion needs to be passed along with satisfying the underlying requirements. There is no minimum capital requirement in regard to conversion of an OPC into a Private Limited Company. The application for conversion is made using the Form INC-6, to the Ministry of Corporate Affairs, Govt. of India.

There are typically two types of conversion:

Voluntary Conversion

One Person Company (OPC) can choose to voluntary apply for conversion into a Private limited or Public limited only after the expiry of two years from the date of incorporation and the fulfilment of the conditions for conversion. Its Memorandum and Article of association will be modified at the time of conversion into a private limited company or public limited company.

Compulsory Conversion

There are two situations that need to be fulfilled for a Company to remain as One Person Company:

• It has only one person as a member.
• The paid up share capital of an OPC does not surpass 50 lakh rupees or its average annual turnover during the relevant period does not go beyond 2 crore rupees

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