Conversion of OPC into a Private Limited Company
In India, the OPC structure is a special type of business model in which a solo entrepreneur is allowed to run a single-person business, enjoying the advantage of limited liability without having a partner. It is specifically suited for those entrepreneurs who wish to form a business but do not need the complexity involved in a partnership or a private limited company. However, as the company expands and matures, an OPC may no longer serve the entrepreneur’s purpose, particularly for scale, investment, and flexibility of operations.
At this point, converting the OPC into a Private Limited Company is a tempting idea. This transition enables the entrepreneur to introduce partners, raise capital, and scale the business while gaining more credibility and legal latitude.
At Startupportal Business Services, we are experts at providing hassle-free support for OPC to Private Limited Company conversion with strict adherence to legal requirements while making the whole process easier for you.
Why Convert OPC to a Private Limited Company?
When your business expands, the constraints of an OPC model can restrict growth and the possibility of raising funds. The following are some of the primary reasons to convert your OPC to a Private Limited Company:
- Business Expansion: An OPC is meant for one promoter, but a Private Limited Company can have multiple shareholders and directors. This facilitates the entry of partners and the expansion of your operations.
- Investment Opportunities: Investors prefer to invest in Private Limited Companies since they provide more transparency, credibility, and legal protection than OPCs.
- Compliance Advantages: Private Limited Companies have more stringent regulatory compliance, which improves their credibility with investors, clients, and stakeholders.
OPC vs Pvt Ltd Comparison:
Directors and Shareholders:
- OPC: Minimum 1 director and only 1 shareholder are required, which is ideal for single entrepreneurs.
- Private Limited Company: At least 2 directors and 2 shareholders, providing greater flexibility to grow the business.
Compliance and Capital:
- OPC: Lower compliance burden.
- Private Limited Company: Greater compliance exposure, but unlimited capital and turnover, enabling growth opportunities.
Legal Framework and Type of Conversion for OPC:
The conversion of a One Person Company (OPC) into a Private Limited Company is governed by the Companies Act, 2013, specifically under Section 18 and Rule 6 of the Companies (Incorporation) Rules, 2014. There is only one type of conversion available for an OPC — Voluntary Conversion — which can be carried out by a single promoter after two years have passed since the company’s incorporation.
Pre-Conversion Requirements:
Before you undertake the process of converting your OPC into a Private Limited Company, there are a few pre-conversion requirements that you need to fulfill:
- Increase the Number of Members and Directors: A Private Limited Company shall have at least two members and two directors.
- Alteration of MoA & AoA: Memorandum of Association (MoA) and Articles of Association (AoA) must be modified as per the conversion into a Private Limited Company.
- Board and Shareholder Approval: There shall be a board resolution, and the shareholders shall also sanction the conversion.
- Ensure No Outstanding Compliance: Check whether all ROC compliance requirements are paid up to date and free of outstanding defaults and filings.
Detail-by-Detail Procedure of Conversion:
The step-by-step conversion process for an OPC into a Private Limited Company is as follows:
- Board Meeting: Initially, pass the resolution convening a board meeting to adopt the process of conversion.
- Alteration of MoA & AoA: The AoA and MoA should be modified, updating the name to “Private Limited.”
- Obtain NOC from Creditors: You need to get a No-Objection Certificate (NOC) from members and creditors of the company.
- Filing E-Forms:
- INC-6: It is the application form for the conversion.
- MGT-14: If a special resolution has to be done, then it needs to be filed.
- INC-27: It is a discretionary form based on the ROC office.
- Certificate of Incorporation: When the application is processed and cleared by the ROC, a Certificate of Incorporation for the Private Limited Company shall be issued.
Documents Required:
You will require the following documents to help with the conversion:
- Altered MoA & AoA: The revised MoA and AoA will include the conversion to Private Limited.
- Board Resolution: A board resolution was adopted to approve the conversion.
- NOC from Creditors: No-Objection Certificate from creditors.
- Affidavit & Declaration of the Director: A declaration that the company does not have any pending litigations or compliance issues.
- List of Members and Directors: List of existing members and directors of the OPC.
- Latest Financial Statements: The latest financial statements of the Company.
Post-Conversion Compliance:
After completing the conversion, here’s what you have to do:
- Update PAN, TAN, Bank Accounts, Contracts, and Licenses: These need to be updated to show the new form as a Private Limited Company.
- Notify Stakeholders and Update Business Stationery: Inform all stakeholders of the change and update your business stationery, such as your letterhead, business cards, and contracts.
- Adhere to Private Limited Company Rules: This involves conducting Annual General Meetings (AGMs), statutory audits, and submitting compliance documents.
Key Points to Remember:
- Liabilities and Obligations: The conversion does not impact the company’s liabilities or obligations. All debts and outstanding matters are intact.
- Pending Compliance: Make sure there are no outstanding ROC filings before starting the conversion process.
How Start Support Can Help?
At Startupportal Business Services, we provide professional end-to-end support for the OPC to Private Limited Company conversion process. Our experts make sure that all the documents are in place, filings are made correctly, and your company is compliant throughout the process. We offer budget-friendly packages specifically designed for growing businesses and startups.
Whether you need Private Limited Company registration in Pune or help with OPC conversion in India, Startupportal has your back every step of the way.
Call to Action:
Ready to grow your business? Converting your OPC into a Private Limited Company is the step towards growth and adaptability. Let Startupportal Business Services facilitate this process with ease and without hassle. Call us today for a free consultation and begin your path to business success!