How to convert a OPC to Private Limited – A step by step guide

OPC stands for One Person Company. It has certain restrictions which a private limited company doesn’t have.

A OPC doesn’t allow;

  • more than one investor to invest in the company,
  • a member to invest more than Rs 50 lakh as paid-up share capital,
  • to have turnover of more than Rs 2 Crore.

One Person Company is a best choice when the business is small and you don’t want anyone to share your profit.

If by mistakenly you have formed a OPC and want it to get converted to private limited then this article is for you.

In our earlier article, we have discussed when you can convert a one person company to private limited in India. In this article, we will discuss the step by step procedure to convert a OPC to Pvt Ltd.

Convey a board meeting

The first and foremost step is to conduct a board meeting of directors to discuss the purpose of conversion, to increase minimum number of directors and members to 2 or more, and to alter its Memorandum (MOA) and articles of association (AOA).

It doesn’t matter whether you have to mandatorily convert OPC to Pvt Ltd or voluntarily, board resolution stating the reason of conversion, increase in number of members and directors, and other alteration is a must.

File e-form INC-5

Within a period of 60 days from the date when mandatory conversion criteria are satisfied, the OPC has to file e-form INC-5 with ROC.

Following documents are required to be attached with INC-5:

  • Certified true copy of the board resolution as discussed above.
  • Copy of the duly attested latest financial statements.
  • Certificate from a practicing chartered accountant for calculation of average annual turnover showing that during the relevant period (for last 3 preceding financial years) OPC has crossed Rs 2 crore. It’s a mandatory attachment only when you are converting opc to pvt ltd on account of crossing average annual turnover of 2 crores.
  • Any other optional attachment based on requirements.

Filing INC-5 with above documents will not convert your OPC to Pvt Ltd.

This form is just a notice to ROC informing that it ceased to be a OPC and now it’s required to get converted to private limited as per the provisions of companies act, 2013.

In case of voluntary conversion, you are not required to file e-form INC-5.

File e-form INC-6

Within 6 months from the date of exceeding the threshold limit, the OPC has to file INC-6 with following attachments to convert the One Person Company to private limited with minimum of 2 members and 2 directors or a public company with at least of 7 members and 3 directors.

In case of voluntary conversion, you have to file INC-6 form within 30 days of passing the board resolution.

Following documents are to be attached with e-form INC-6:

  • Certified true copy of the resolutions passed in a board meeting.
  • Altered copy of MOA and AOA.
  • Scanned copy of latest financial statements.
  • Special resolution for conversion by certifying a person to file the form with ROC. You must file MGT-14 for the special resolution before filing INC-6. SRN of filing MGT-14 has to be mentioned in INC-6.

In INC-6, you have to make sure that following details are filled up accurately.

Date of exceeding the threshold limit

You need to ensure that the date you enter in this form is the same date on which the paid up share capital or average annual turnover of the company, as the case may be has exceeded the threshold limit.

Amount so exceeded the threshold limit

Enter the amount (paid up capital or average annual turnover) by which the OPC has exceeded the threshold limit. User is required to make sure that the date and amount entered should be same as mentioned in eForm INC-5.

Specify the relevant period (in case turnover selected)

Enter the relevant period in short description of immediately preceding three consecutive financial years when the average annual turnover of the OPC has exceeded the threshold limit of two crore rupees. For example 01/04/2015 to 31/03/2018 may be entered as a format of relevant period.

If ROC after filing forms is satisfied, then it will issue certificate to effect the conversion.

After converting the OPC to Pvt Ltd, you are required to do the following things:

  • Apply to income tax department to change name of the company in the existing Permanent Account Number. Don’t apply for a new PAN. You need to attach the new conversion certificate issued by ROC.
  • Inform your banker to do necessary changes and allow the authorized person to run the bank account.
  • Change all related certificate with respective governments such as GST, MSME.
  • Print and circulate new MOA and AOA to everyone.

Penalty for non conversion or delay in conversion

In case the OPC has not converted to private or public limited within the time allowed, then the One Person Company or its officer shall be punishable with fine which may extended to Rs 10,000 and with a further fine which may extend to Rs 1,000 per day for the delay.

is a fellow member of the Institute of Chartered Accountants of India. He lives in Bhubaneswar, India. He writes about personal finance, income tax, goods and services tax (GST), company law and other topics on finance. Follow him on facebook or instagram or twitter.