How To Convert OPC Into Private Limited Company

A One Person Company (OPC) can be converted lawfully into a Private Limited or Public Limited company, voluntarily or mandatorily.

What is One Person Company

One person company (OPC) has been defined under Section 2(62) of the Companies Act 2013. One Person Company can be defined as a company which has only one person as it member.

The concept of OPC was introduced to support single person enterprises that are having small businesses with a sales turnover of fewer than 200 lakhs. It was introduced to enable a lone Entrepreneur to start and manage a limited liability entity.

What is Private Limited Company

Private Limited Company can be termed as a Company which is having private ownership. Private Company may issue shares and have shareholders but their shares do not trade on public exchanges.

Private Company is held by few individuals privately having a separate legal entity. A Private Company should have a minimum number of 2 shareholders and maximum of up to 200 shareholders.

It should have the minimum number of 2 directors and it can have the maximum number of 15 directors.

Compulsory Conversion: When an OPC has paid up share capital that exceeds Rs.50 lakhs and the annual turnover is above Rs.2 crores, then it is obligatory for them to convert into a private limited company.

During the conversion, the members have to just pass a special resolution in the general meeting.

Before the resolution is passed, a No objection Certificate has to be taken in writing from the creditors, and the other members.

Within fifteen days of the passing of the resolution, company needs to file an application to the registrar along with a copy of the resolution. After the application is filled and the fee payed, the registrar then makes a decision after studying the documents and issues the certificate of conversion.

Voluntary Conversion: When an OPC is incorporated, the conversion cannot happen before two years. The procedure of voluntary conversion of an OPC into a private limited company falls under the section 18 of the Companies Act.

The company can convert into another company coming under the same act by the modification of the memorandum of the association and articles of the association in accordance with the provisions.

An application has to be made by the company to register along with the relevant documents which are essential for the conversion.

On submission of all relevant documents, the registrar has the power to issue a certificate of incorporation.

The registration of the company under this act will not affect any liabilities, debts, or obligation before and after the conversion.

After the conversion is done, it is obligatory for a private limited company to have a paid up share capital of Rs.50 lakh and also an annual turnover should not be less than 2 crores, failing which, it can convert back to an OPC by passing of a special resolution.

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