As per Section 18 of the Companies Act, 2013, a Private Limited Company can be converted into a One Person Company (OPC) through a legal mechanism introduced from 1st April 2014.

This conversion does not affect any existing obligations of the private company. All contracts, liabilities, and responsibilities prior to the conversion remain legally binding, and the resulting OPC will be liable for them.

The OPC structure offers greater control to solo entrepreneurs, while retaining limited liability and legal continuity.

Benefits of Converting a Private Limited Company to an OPC

1. Limited Liability Protection: In an OPC, the director's liability is limited to the amount invested in the business. Unlike sole proprietorships, personal assets like home, car, or jewelry remain protected—even if the business incurs debt.
2. Continuity of Business: An OPC enjoys perpetual succession. In the event of the promoter's death, the business does not dissolve but continues to operate through the nominee director.
3. Reduced Compliance Burden: With only one shareholder and one director, OPCs are subject to fewer annual compliance requirements—making management simpler and more cost-effective.

Requirements to Convert a Private Limited Company into OPC

Pre-Conversion Compliance

• Properly maintained books of accounts and balance sheet.
• All ROC (Registrar of Companies) returns must be filed.
• Stamp duty paid and share certificates reconciled correctly.
• TDS deducted and corresponding returns filed.
• GST/VAT/Service Tax returns filed and payments cleared.
• Proper maintenance of board and shareholder meeting minutes, statutory registers at the registered office.
• Registered under the Shops and Establishment Act in applicable states.
• Compliant with Professional Tax regulations, where applicable.
• PF registration (if employees >20) and ESIC registration (if employees >10) must be in place, along with return filings and dues payments.

Eligibility Criteria for Conversion

• Paid-up capital must be less than ₹50 lakhs.
• Turnover should be below ₹2 crores in the last three consecutive financial years (or since incorporation if newer).
• The sole shareholder must be:
  • An Indian citizen and resident (180+ days in India during the calendar year).
  • Not a member or nominee in any other OPC.
  • Not a minor.

Documents Required for Conversion of Private Limited Company into OPC

For Form MGT-14:

• Notice of the EGM with explanatory statement
• Certified true copy of the special resolution
• Altered Memorandum (MOA) and Articles of Association (AOA)
• Board resolution authorizing the conversion

For Form INC-6:

• List of all creditors and members
• Latest audited balance sheet
• NOC from secured creditors
• NOC from all members and unsecured creditors
• Director’s affidavit declaring:
  • Consent of all creditors and members for the conversion
  • No objection from any stakeholder

Process to Convert Private Limited Company to OPC

1. Convene a Board Meeting:
   • Directors must meet to approve the proposal for conversion.
   • Decide the date, time, and venue for an Extraordinary General Meeting (EGM).
   • Draft the EGM notice and a special resolution to approve the conversion.
2. Issue EGM Notice:
   • Send the EGM notice to all shareholders, directors, and auditors at least 21 days before the scheduled meeting.
   • Attach the agenda, draft resolution, and explanatory statement.
3. Obtain NOC from Creditors:
   • Secure a No Objection Certificate (NOC) from all creditors of the company prior to the EGM.
   • Submit a copy of the approvals as supporting documents.
4. Conduct the EGM:
   • Hold the EGM as scheduled to pass the special resolution for:
     • Conversion into OPC
     • Alteration of the MOA and AOA
5. File Special Resolution with ROC:
   • File Form MGT-14 with the Registrar of Companies (ROC) within 30 days of passing the resolution.
   • Attach required documents such as altered MOA, AOA, and resolution copies.
6. File Conversion Application:
   • Submit Form INC-6 with all mandatory attachments like:
     • List of creditors and members
     • Latest audited balance sheet
     • NOCs and affidavits from directors
7. Certificate of Conversion:
   • Upon approval, the ROC issues a Certificate of Incorporation reflecting the change from a Private Limited Company to a One Person Company (OPC).

How to Apply for Conversion of Private Company into OPC

Documents Required for Form INC-6 Filing

1. Director’s Affidavit & Declaration:
   • A declaration with an affidavit by all directors confirming:
     • Consent from all members and creditors
     • Paid-up capital is below ₹50 lakhs
     • Average annual turnover is under ₹2 crores in the last 3 financial years
2. Member’s Affidavit: Affidavit from the sole member confirming compliance with capital and turnover limits.
3. CA Certification: Certificate from a practicing Chartered Accountant validating the paid-up capital and turnover thresholds.
4. Financial Statements: Latest audited profit and loss account and balance sheet of the company.
5. No Objection Certificate (NOC): NOC from all creditors of the company.
6. Company Structure Details: List of current members and directors.
7. Resolutions: Copy of Board Resolution and Special Resolution passed at the EGM, along with the notice, agenda, and explanatory statement.
8. Revised MOA & AOA: Modified Memorandum and Articles of Association reflecting OPC-specific clauses.

Post-Conversion Requirements for the OPC

• Apply for a new PAN card for the OPC.
• Update all company stationery with the new OPC name.
• Notify the bank and update company bank account details.
• Inform relevant departments like GST, Income Tax, and MCA about the conversion.
• Keep printed copies of the updated MOA and AOA for official use.

Disclaimer: The information provided is for general guidance only. It does not constitute legal advice. Please consult a licensed legal expert for personalized assistance.

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