What is the Procedure of Converting One person Company into Private Company?

The One Person Company is a newly incorporated type of company, which has recently introduced in the companies 2013. This business entity not only support entrepreneurs but also in the growth of the economy. There can be only one, natural resident of India can be a director of the One Person Company. However, there is no restriction on maximum number of the directors.

Features of One Person Company:

-           One person company need not hold annual general meeting every year.

-           One person company is required to be mentioned in brackets below the name of such name of the company, wherever its name is printed.

-           Shareholder of the one person company should be first act as the director of the company, until the company appoints a director.

-           One person company paper work is lesser than other business entities at the time of registration.

Features of Private Company:

  • There was a minimum paid-up share capital requirement of Rs. 1 lakh previously, but that is omitted now.
  • A private company can have a minimum of just two members (but just one is enough if it a One Person Company), and a maximum of up to 200 members.
  • All private companies must include the words “Private Limited” or “Pvt. Ltd.” in their names.
  • The liability of the members is limited to the amount unpaid to the company with respect to the shares held by them.
  • The conversion of OPC into Private limited company as per section of 18 of the companies act 2013. There are two ways of converting OPC into Private Limited Company either voluntarily and mandatorily. Under both these conversions, the requirements are necessary alteration in the MOA and AOA of the OPC.

Two Types of Conversion:

For converting an OPC into Private Limited Company, the provisions laid down in the Section-18 of the Indian Companies Act of 2013, and the Companies (Incorporation) Rules of 2014, in particular the Rule 7(4) of the Companies (Incorporation) Rules, 2014, needs to be followed for both the conditions; voluntarily and under compulsion.

Voluntarily Conversion of OPC to Private Company:

Voluntary conversion into a private limited company is not permitted unless two years is expired from the date of incorporation of the OPC. Though, if the paid-up share capital exceeds rupees 50 lakhs or if its average turnovers exceed INR 2 crores then within two months, the OPC could convert into a private limited company.


The OPC shall obtain "No Objection" in written form, from its members and creditors.

The OPC is required to pass a special resolution in the general meeting in support of its conversion to a private limited company. The copy of such resolution must be sent to the concerned ROC within Thirty Days of its occurrence, through the Form No. MGT-14.

Filing Form INC-6, the Application for Conversion, along with the fees prescribed in the Companies (Registration offices and fees) Rules of 2014, and by attaching the following documents:

A solemn declaration of the director of OPC, affirming that all concerned members and creditors of the company have given their independent consent in support of such conversion, and also that the prescribed financial thresholds for cessation of OPC are beyond access at the time of conversion.

List of members, and list of creditors if any.

A copy of No Objection letter from creditors

The latest audited balance sheet on the profit and loss account


Mandatory Conversion of OPC to Private Company:

Under mandatory conversion, if the OPC crosses the threshold limits mentioned above, it must mandatorily convert itself within two months.

Section 18, Companies Act 2013

Section 18 of the Companies Act, 2013 gives the procedure for conversion of companies already registered. It states the following points:

The company can convert itself by altering its memorandum and articles of association.

The Registrar of companies based on the application can issue a fresh certificate of incorporation

The new registration shall not affect the debts, liabilities, obligations or contracts entered into previously by the company.

Also to be followed is the Companies (Incorporation) Rules, 2014.

According to the rules and regulations given in the Companies (Incorporation) Rules 2014, an OPC is mandatorily required to convert itself to a private or public limited company, if its (OPC's) total Paid-up Capital equals to or gets more than Fifty Lacs (INR-50 Lacs) or its Average Annual Turnover during the relevant period (immediately preceding three consecutive financial years) equals to or exceeds Rs. Two Crores (INR-2 Crores). Within Sixty Days of the occurrence of any of these two rigorous conditions, the existing OPC is compulsorily required to give a notice of the specified occurrence to the concerned ROC in Form INC-5

Important Mind Point to be Kept in Mind While Conversion:

  • One shareholder: his is the fundamental concept of a One Person Company. In fact, One Person Company is defined in the Companies Act as a Company which has only one member. A single shareholder holds 100 percent shareholding.
  • One Director

The other important point is that a One Person Company may have only one director. But at the same time there is no bar on more number of directors. However, as per the Act, the total number of directors shall not be more than 15


  •  Nominee

This is a very important concept where the person forming the One Person Company has to nominate a Nominee with his written consent who, in the event of death or inability to contract of the owner of the One Person Company, shall come forward and take over the reins of the one person company.

  •  Taxation

Since nothing has been specified as such by the finance ministry, it is assumed that the rates of taxation applicable for a private limited company shall apply to a One Person Company.

Final Say:

We hope you understand the procedure of converting OPC into Private limited company. If you want to convert OPC into private limited company, feel free to contact Unilex Business Consultant.

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