Provides a detailed guide on each step in the conversion process, from legal filings to operational adjustments.
As your business grows and the need for expansion becomes apparent, converting your One Person Company (OPC) into a Private Limited Company (Pvt Ltd) can be a strategic move. This transition opens doors to attracting investors, expanding ownership, and tapping into growth opportunities. However, the process can seem overwhelming if you don’t know where to start. This guide walks you through the step-by-step Process to Convert OPC into a Pvt Ltd company, ensuring a smooth and legally compliant transition.
Pre-requisites for Converting OPC into Private Limited Company
Before diving into the Process to Convert OPC, it’s important to understand the eligibility criteria and the documents you’ll need to gather. These pre-requisites ensure you meet the basic conditions and can proceed with the conversion legally.
Eligibility Criteria for Conversion
Certain conditions must be met before your OPC can be converted into a Pvt Ltd company. These criteria include:
- Turnover Threshold: If your OPC’s annual turnover exceeds ₹2 crore, you are required to convert into a Private Limited Company. This threshold is put in place to encourage businesses with substantial revenue to adopt a more scalable structure.
- Share Capital: There’s no mandatory minimum share capital requirement after the Companies Amendment Act, but it’s important to have adequate authorized and paid-up capital to meet your business needs.
- Members Count: An OPC can only have one member (owner), but once it converts to a Pvt Ltd, you will need to bring on at least two members. The maximum number of members allowed in a Pvt Ltd company is 200.
- OPC Rules: The company must follow OPC rules for at least two years from its incorporation, except in cases where turnover exceeds ₹2 crore or paid-up share capital exceeds ₹50 lakh before that period.
Once these basic criteria are met, you can move forward with the conversion process.
Documents Required for the Process to Convert OPC
To begin the conversion, gather the necessary documents. These ensure that the process moves smoothly without delays in verification or legal scrutiny:
- DIN (Director Identification Number): This number is required for all existing directors of the company.
- PAN Card: Each director and shareholder should have a valid PAN card for identification purposes.
- Address Proof: Recent address proof for all directors, such as utility bills or bank statements, is required.
- OPC Registration Certificate: The original registration certificate of the OPC must be submitted.
- Shareholder Details: Information on new shareholders (if applicable) should be provided, along with their identity and address proofs.
Step-by-Step Process to Convert OPC to Private Limited Company
Now that you’ve met the eligibility requirements and gathered the necessary documents, you’re ready to begin the actual conversion process. Below is a step-by-step guide on how to convert your One Person Company into a Pvt Ltd company.
Step 1: Board Meeting Resolution for Conversion
The conversion process begins with an internal decision.
- The company must convene a board meeting with all directors present. During this meeting, a board resolution is passed to approve the conversion of the OPC into a Private Limited Company.
- The resolution must obtain the legal approval of the board members, and minutes of the meeting should be recorded.
- If you’re the sole director of the OPC, you’ll still need to pass this resolution for legal purposes and obtain consent to begin the conversion.
Once the resolution is passed, you can move on to filing the necessary forms.
Step 2: Filing Form MGT-14 with the ROC
Once the board has approved the conversion, the next step is to file Form MGT-14 with the Registrar of Companies (ROC).
- This form is used to submit the special resolution passed by the board regarding the conversion.
- The form needs to include details of the board resolution and is filed online through the Ministry of Corporate Affairs (MCA) portal.
- The form must be submitted within 30 days of passing the board resolution to avoid penalties or delays.
By completing this step, you are formally notifying the ROC of your intent to convert from an OPC to a Pvt Ltd.
Step 3: Application for Conversion (Form INC-6)
The next crucial step is filing Form INC-6, which is the official application for conversion.
- This form is submitted through the MCA portal and requires a detailed application outlining your intention to convert.
- You’ll need to attach documents such as the board resolution, identity proofs, the original OPC registration certificate, and shareholder details (if applicable).
- Additionally, you’ll need to pay the application fees, which vary based on the company’s authorized capital. The fees are clearly outlined on the MCA portal when filing the form.
- Once filed, the form typically takes a few weeks to process, depending on the complexity of the conversion and any additional scrutiny from regulatory authorities.
Step 4: Approval of Conversion by the ROC
After submitting Form INC-6, the ROC will review the application and verify all documents.
- The approval process involves checking for legal compliance, such as whether the company meets the required thresholds for turnover and shareholding.
- During this stage, the ROC may request additional documents or clarifications, so it’s essential to respond promptly to avoid delays.
- Once the ROC is satisfied, they will issue a new Certificate of Incorporation, officially recognizing the conversion of your OPC into a Pvt Ltd company.
This approval marks the formal completion of the conversion process.
Step 5: Post-Conversion Compliance Requirements
After receiving the new Certificate of Incorporation, several post-conversion requirements must be fulfilled to ensure smooth operations under the new Pvt Ltd structure.
- Shareholding Pattern: Update your company’s shareholding pattern to reflect the new shareholders (if any). Ensure all share certificates are issued and recorded.
- Revised MOA and AOA: The company must adopt a revised Memorandum of Association (MOA) and Articles of Association (AOA) that align with the Private Limited Company structure. These documents outline the company’s objectives and governance model.
- Legal Filings: Make sure all statutory filings are updated with the ROC to reflect the new company structure. This includes updating company records, directors, and shareholders.
- Compliance Requirements: Pvt Ltd companies must adhere to stricter compliance requirements, such as conducting regular board meetings, submitting annual returns, and undergoing statutory audits.
It’s essential to have professional help, such as a company secretary or legal advisor, to ensure that these compliance requirements are met without any hiccups.
Conclusion
Converting an OPC into a Private Limited Company is a major milestone for businesses looking to expand and attract more investment. While the process to Convert OPC requires careful planning, following this step-by-step guide ensures you can navigate the conversion smoothly.
From passing the initial board resolution to filing the necessary forms and meeting post-conversion compliance obligations, each step brings your company closer to unlocking growth opportunities. With the flexibility to add new shareholders, attract external funding, and scale operations, the Pvt Ltd structure is the perfect vehicle to drive your business forward.
While the process to Convert OPC might seem daunting at first, with the right preparation and support, converting from an OPC to a Pvt Ltd company can be a seamless transition that sets the foundation for long-term success.
