Conversion of Private Company into OPC

October 10, 2025 by Team Instabizfilings

Introduction

A One Person Company is a new concept under the Companies Act, 2013 in India. It permits a single person to incorporate and operate a company with limited liability protection. An OPC offers the same advantages as a private limited company but with lesser complexity and compliance.

A private company can be transformed into an OPC subject to certain conditions, and the procedure for doing so is governed by the Ministry of Corporate Affairs (MCA).

Features of One Person Company (OPC)

Before proceeding into the process, it is necessary to determine the features of OPCs:

Single Shareholder: OPC may be formed and run by a single shareholder.
Limited Liability: The liability of the owner is restricted to the amount of unpaid share capital.
Separate Legal Entity: The OPC possesses a separate legal identity from its owner.
Perpetual Succession: OPC survives even if the owner expires or becomes incapacitated for conducting the business.
No Minimum Capital Requirement: There is no minimum paid-up capital to be kept by OPCs, although the company can be in need of capital for operating.

Eligibility Criteria for Conversion of Private Company into OPC

A Private Company can be converted into an OPC if it meets the following conditions:

Only One Shareholder: The company must have only one shareholder, or one of the shareholders must agree to become the sole shareholder.
No Debt or Liabilities: The company should not have any outstanding debts or liabilities at the time of conversion.
Share Capital: The company should have a paid-up capital of up to ₹50 lakhs. If the capital exceeds this limit, it cannot be converted into an OPC.
Voluntary Conversion: The conversion is generally voluntary and requires the approval of the company’s shareholders.

Reasons for Converting to OPC

Some reasons why a private company might choose to convert to an OPC include:

Single Ownership: The conversion allows the entrepreneur to have complete control over the business.
Limited Liability: It ensures limited liability protection, separating personal assets from business assets.
Simpler Compliance: OPCs have fewer compliance requirements compared to private companies.
Easier to Manage: Managing an OPC is less complex than a multi-member private company.

Steps for Converting a Private Company into an OPC

The process of converting a private limited company into an OPC involves the following steps:

Step 1: Board Resolution

The board of directors of the private company must pass a resolution to approve the conversion into an OPC. The shareholders must also pass a special resolution in the general meeting of the company.

Step 2: Application to MCA

Once the special resolution is passed, the company must file an application with the Ministry of Corporate Affairs (MCA) for the conversion. The application is submitted through the form MGT-14 to notify the Registrar of Companies (RoC) about the intention to convert the company.

Step 3: Submission of Documents

Along with the application, certain documents must be submitted, including:

Altered Memorandum and Articles of Association (MOA & AOA) : reflecting the conversion to OPC.
Shareholder’s Resolution : approval from the members to convert the company.
Director’s Resolution : approval from the board of directors.
Consent of the Sole Shareholder : to be the only shareholder of the OPC.

Step 4: Compliance Check by ROC

The Registrar of Companies will check if the company fulfills the eligibility criteria and is in compliance with all the regulatory requirements. If all conditions are satisfied, the ROC will approve the conversion.

Step 5: Issuance of Certificate of Incorporation

Once the ROC grants approval, a Certificate of Incorporation will be issued for the newly converted OPC. The company can now continue its operations as a One Person Company.

Documents Required for Conversion

Here is a list of documents that need to be submitted during the conversion process:

Board Resolution : to approve the conversion.
Shareholders’ Special Resolution : to approve the conversion.
Memorandum and Articles of Association (MOA and AOA) : with the amended clause reflecting the OPC structure.
Consent of the sole shareholder : agreeing to be the only member of the company.
Certificate of No Objection from Creditors (if applicable) : confirming no objection from creditors regarding the conversion.
Auditor’s Certificate : verifying that the company is eligible for conversion.

Benefits of Converting to OPC

Some of the major advantages of switching to an OPC are:

Complete Control: Being the only shareholder, you enjoy absolute control over decision-making.
Limited Liability: Your liability is restricted to the extent of unpaid capital, safeguarding your personal assets.
Separate Legal Entity: The OPC will be considered as an independent legal entity apart from its owner.
Simple Compliance Requirements: OPCs have less regulation and compliances than private companies.
Perpetual Succession: OPC remains in existence even upon the death or incapacity of the owner, and hence, business continuity.

Disadvantages of OPC

While there are advantages, there are some disadvantages:

Restrictions on Growth: OPCs can have only a single shareholder, which restricts expanding through multiple investors.
Limited Shareholder Flexibility: The OPC owner must have it converted into a private company in order to include more than one shareholder.
Capital Restriction: The highest permitted capital for an OPC is ₹50 lakh. In case the limit is crossed, the OPC has to get converted into a private limited company.

Conversion of OPC to Private Company

An OPC may also be converted into a private company in certain cases such as:

Grow in number of shareholders beyond one.
Increase in paid-up capital above ₹50 lakh.

For this, the company has to undertake the formal process under the Companies Act, 2013, such as passing resolutions and making filings in the MCA.

Conclusion

Conversion of a private company to an OPC is a favorable move for small business entrepreneurs who like to keep full control over their business function. Although the process entails legal procedures and paperwork, it finally makes management easy and lessens compliance obligations.

Before starting the conversion process, it's necessary for business owners to verify whether the company is eligible and to seek advice from lawyers and accountants for hassle-free conversion.

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