Can OPC be Converted into a Private Limited Company?

The introduction of the Companies Act, 2013, brought a significant change to India’s corporate structure by introducing the concept of a One Person Company (OPC)) for the first time, its a unique business entity where a single individual owns and runs the company—essentially a one-shareholder company with 100% stake and this structure differentiates OPCs from other company types:

• A Private Limited Company requires at least two people to incorporate and operate.

• A Public Limited Company requires a minimum of seven people.

Conversion of OPC and Private Companies – Form INC-6

The Companies Act, 2013, under Section 18, 4, and 5, read with Rules 6 and 7 of the Companies (Incorporation) Rules, 2014, provides a structured process for converting an OPC into a Private or Public Limited Company and vice versa. The webform INC-6 was introduced to simplify this conversion by allowing companies to apply directly to the Registrar of Companies (RoC)-MCA.

• OPC to Private/Public Company: An OPC can voluntarily convert into a Private or Public Limited Company by filing Form INC-6 with the RoC.

• Private Company to OPC: Similarly, a Private Limited Company can apply for conversion into an OPC through the same form.

A key advantage of OPCs is their flexibility to convert into Private or Public Limited Companies at any time after company registration, without restrictions on revenue thresholds or business scale, makes OPCs an excellent starting point for solo entrepreneurs who can transition to a larger business structure as they grow.

OPC Company offers a simple and flexible business structure, particularly for solo entrepreneurs, with the option to convert into Private or Public Limited Companies when needed. However, if the business intends to operate as a non-profit entity, forming a Section 8 Company from the outset is essential, as OPCs cannot transition into this structure.

Exception: OPCs Cannot Convert into Section 8 Companies

While OPCs have the freedom to transition into other company types, there is one significant limitation—they cannot be converted into a Section 8 Company. Section 8 Companies, commonly known as Non-Profit Organizations (NGOs), are incorporated for charitable purposes and operate under strict regulatory frameworks that prohibit such conversions.

Provisions for OPC Conversions under Companies Act, 2013

Section 18 of the Companies Act, 2013

Under the Companies Act, 2013, a company registered under one classification can convert itself into another class by amending its Memorandum of Association (MOA) and Articles of Association (AOA) in compliance with the provisions of the Act.

Rule 6 of the Companies (Incorporation) Rules, 2014

As per Rule 6, a One Person Company (OPC) can be converted into a Private or Public Limited Company (except a Section 8 Company) by:

Increasing the minimum number of members and directors:

(a) Private Limited Company: At least 2 members and 2 directors.

(b) Public Limited Company: At least 7 members and 3 directors.

To check the compliance with the minimum paid-up capital requirements as prescribed for the new company type.

Meeting the procedural requirements outlined in Section 18 of the Act.

Example: Conversion of an OPC into a Private Limited Company

TechGuru Solutions OPC Private Limited, a technology-based company, was incorporated in 2021 to provide software development services. The company was founded by Mr. Ramesh Kumar, a software engineer by qualification, who served as the sole shareholder and director. He opted for the One Person Company (OPC) structure due to its flexibility and lower compliance requirements.

By 2024, TechGuru Solutions experienced significant growth, with its annual revenue reaching Rs.70 lakh. As the business expanded, Mr. Ramesh Kumar decided that converting TechGuru Solutions OPC into a Private Limited Company would be the best course of action to accommodate further growth, attract investors, and bring in additional partners.

To facilitate the transition, he proceeded with the conversion process by complying with the Companies Act, 2013, and filing Form INC-6 with the Registrar of Companies (RoC)/,MCA.

Procedure for Conversion of an OPC Into a Private Limited Company

1. Prepare Draft Altered Memorandum of Association by incorporating the changes required for Conversion of OPC into Private Limited Company

2. Prepare Draft Altered Article of Association by the incorporation the following changes

(a) Insert restrictions applicable to Private Limited Company as per Section 2 (68)

(b) Incorporate the Changes as required for Private Limited Company

3. Draft and Issue Notice of Board Meeting at least 7 days before the Board Meeting (Section 173 (3) of the Companies Act 2013

4. Convey the Board Meeting as per the Notice calling the Board meeting for

(a) Considering the Proposal for Conversion of OPC into Private Company & Alteration of MOA and Article of Association

(b) Increase the Number of Directors to minimum of Two (2) as per section 149 of the Companies Act 2013 as required in case of Private Limited Company

(c) Increase the Number of Members to Minimum of Two (2) as per section 2 (68) of the Companies Act 2013 as required in case of Private Limited Company

5. Pass the Resolution in Board Meeting for Conversion of OPC into Private Limited Company

(a) In case OPC have Only One Director then Enter the Resolution in the Minutes Book of the Director’s Meeting, which should be signed and dated by the director and date of signing shall be considered as the date of Board meeting as per Section 122(4) of the Companies Act 2013

(b) In case OPC have Two or more Directors then hold a Board meeting and the pass the Board Resolution for Conversion

6. The Resolution passed for alteration of Memorandum and Article of Association of the Company shall be duly communicated to member and enter in the minutes book required to maintained under section 118 of the Companies Act 2013 and signed and dated by the member and date of signing shall deemed to be the date of the meeting for the compliance of Provision of the Act ( Rule 6(3) read with section 122(3) of the Companies Act 2013

7. Filling of Resolution pursuant to Section 117 of the Companies Act 2013 in E- Form MGT - 14 within 30 days of the passing the said resolution with Registrar of Companies (“ROC”)

8. Filling of Application for Conversion in E- Form INC – 6 with the Registrar of Companies for its conversion of OPC into Private Limited Company within 30 days of passing special resolution

Note: SRN of E- Form MGT -14 is Mandatory field in E- Form INC – 6

9. Filling of Resolution for Appointment of Directors in E form DIR – 12 within 30 days of appointment in case OPC have only One Director for compliance of Provision of section 149 of the Companies Act 2013 or if company intends to appoint more directors

10. Registrar will issue Certificate of Conversion after being satisfied with all the compliance requirements

Documents requirements for INC-6 

E form MGT – 14 to be filed with Registrar of Companies (“ROC”) pursuant to (Section 117 of a Companies Act 2013) for Passing Special Resolution as Required for Conversion of OPC into Private or Public Company. Enclosed form MGT-14 with followings:

1. A copy of altered e- MOA must be attached (Nominee Clause has to be omitted, the word OPC has to be omitted from the name clause of Company).

2. Copy of altered e- AOA must be attached (Articles of private company must be adopted. Remember to include the definition of Private Company as per Section 2(68) in the definition of Company)

3. Copy of the Special Resolution (Remember no copy as explanatory statement has to be attached in case of OPC as Section 102 not applicable to OPC)

4. E form INC – 6 must be filed with Registrar of Companies (“ROC”) within next 30 days of filling MGT – 14 along with following enclosures:- 

• Altered e- MOA ande- AOA of company (INC-33 & INC-34

• Latest financial statements of the company duly signed and attested by statutory Auditor of the Company. (Audited financial statements of the previous year have to be attached).

• Copy of Board resolution approving the conversion of the company and authorising the sending of notice.

Other attachments shall be as follows:

1. Affidavit by all the existing directors of the company for the conversion.

2. Consent by the nominee for the conversion along with PAN and Aadhar duly attested.

3. Board Resolution for approval of transferring the shares to another proposed member(s) along with Share transfer form (SH-4). (Note: There will be no change in the subscription clause of MOA.)

4. List of Members and list of Directors on letterhead of company.

5. List of Creditors with the amounts outstanding against each of their names in accordance with the financial statements of the company along with Individual NOC received from them regarding the proposed conversion.

6. Copy of the Special Resolution.

The Registrar on being satisfied that all the procedural requirements are being complied with shall record the change in its Register and issue the Certificate thereof.

Timeline for FORM Filing with MCA

1. Filing of E-Form MGT-14: The first step in the conversion process is filing E-Form MGT-14, which is required for registering the resolution passed for the alteration of the Memorandum of Association (MOA) and Articles of Association (AOA).

2. Filing of E-Form INC-6: After submitting MGT-14, the company must file E-Form INC-6 with the Registrar of Companies (RoC) within the next 30 days to complete the conversion process.

Applicable Govt Fees for E- Form INC – 6

Normal Filling Fee (In Case of Company having Share Capital)

Additional Fees in case of Delay in filling of webforms

Recent Amendments to the Companies (Incorporation) Rules, 2014

Frequently Asked Questions

Q1. Can we convert an OPC to a private limited company?

Ans. Yes, OPC can be converted to a private limited company pursuant to Section 18 of the Companies Act, 2013 & Rule 6 of Companies (Incorporation) Rules, 2014.

Q2. Can an OPC be converted back to an OPC from a private limited company?

Ans. Once a company has converted from an OPC to a private limited company, the process of conversion cannot be reversed back to an OPC. If the business owner wants to revert to a single-member structure, a new OPC will need to be formed.

Q3. Is it necessary to get the approval of shareholders or creditors for the conversion?

Ans. Yes, the conversion requires the approval of the sole shareholder through a Board Resolution. Additionally, creditor consent may be required in some cases, especially when the company has outstanding liabilities or debts.

Q4. Filling Requirements for Conversion of OPC into Private Limited Company

Ans. E- Form MGT-14 to be filed within 30 days of passing Special Resolution and E- form INC – 6 to be filled for Conversion of OPC into Private Limited Company

Q5. Governing Provision for Conversion of OPC into Private Limited Company

Ans. Conversion Procedure of OPC into Private Limited Company is governed by Section 18 of the Companies Act 2013 read with rule 6 of Companies (Incorporation) Rules 2014.

Q6. Can OPC be converted into any Company since its Incorporation

Ans. Yes, OPC can be converted into any Company since Incorporation restriction under sub rule 7 of 2 years should expire from incorporation for voluntary conversion of OPC into any Company has been Omitted via amendment in Companies (Incorporation) Rules, 2014 w.e.f 1st April 2021.