COMPULSORY CONVERSION OF OPC INTO PRIVATE LIMITED COMPANY

COMPULSORY CONVERSION OF OPC INTO PRIVATE LIMITED COMPANY

In 2021, the requirement for compulsory conversion of a One Person Company (OPC) into a Private Limited Company was removed. Previous rules mandated conversion if the OPC exceeded specific turnover or paid-up capital thresholds. Now, all conversions are voluntary, giving business owners more flexibility.

Reasons to convert your OPC

• Expansion: Allows for the introduction of new shareholders and directors to help you expand your business.
• Funding opportunities: Opens up more options for raising capital, including private equity and venture capital investments.
• Enhanced credibility: A Private Limited Company structure is often viewed as more credible by banks, suppliers, and potential investors.
• No financial restrictions: The removal of turnover and paid-up capital limits allows your OPC to grow indefinitely without a forced change in its legal structure.

Simplified conversion process (Voluntary)

The legal process to convert your OPC is straightforward and is managed entirely with the Ministry of Corporate Affairs (MCA).

Key requirements

• Minimum members and directors: The company must increase its members and directors to at least two.
• Special Resolution: The sole member must pass a Special Resolution approving the conversion.
• No-Objection Certificate (NOC): Obtain a written NOC from all company creditors.
• MOA and AOA alterations: The company's Memorandum of Association (MOA) and Articles of Association (AOA) must be amended to reflect the conversion.

Step-by-step procedure

1. Convene a meeting: Hold a Board Meeting to approve the conversion and the alteration of the company's MOA and AOA.
2. Pass a Special Resolution: The single member must pass a Special Resolution approving the conversion and necessary changes.
3. File with ROC: File e-Form MGT-14 with the Registrar of Companies (ROC) within 30 days of passing the Special Resolution.
4. File conversion application: Submit e-Form INC-6 to the ROC, along with all supporting documents, including the altered MOA/AOA, the Special Resolution, and the creditor NOCs.
5. Receive new certificate: Once the ROC is satisfied with the application and documents, they will issue a new Certificate of Incorporation.

Documents required

• Altered Memorandum of Association (MOA) and Articles of Association (AOA)
• Copy of the special resolution approving the conversion
• No-objection certificate (NOC) from company creditors
• List of proposed new members and directors, along with their consent
• The company's latest audited financial statements
• Affidavit from the directors confirming the consent of members and creditors