Private to One Person Company

Private to One Person Company: complete guide

Introduction

A One Person Company, usually shortened to OPC, is a company with a single member. It was introduced by the Companies Act, 2013 so that an individual founder could enjoy the separate legal identity and limited liability of a company without needing a second shareholder. Many businesses start life as private limited companies with two shareholders, often a founder and a family member or a co-founder who later steps away. When the business is, in practice, owned and run by one person, converting the private limited company into an OPC can make the structure match reality and reduce some of the compliance load.

The conversion is governed by section 18 of the Companies Act, 2013, which allows a company registered as one class to convert itself into another class by altering its memorandum and articles, and by rule 7 of the Companies (Incorporation) Rules, 2014, which sets out the specific conditions for a private company converting into an OPC. The company does not close down and a new company is not formed. The same legal entity continues with the same Corporate Identity Number history, the same PAN, the same bank accounts, the same assets and liabilities and the same contracts. What changes is its class, its name, which will include the words "(OPC) Private Limited", and its constitutional documents.

Although the company continues, the conversion involves a careful sequence of steps. The shareholding has to be brought down to a single individual, a nominee must be appointed, every member and creditor must give written consent, a special resolution must be passed and filed, and an application must be made to the Registrar of Companies with supporting documents and declarations. A gap at any point, such as a missing creditor consent or a share transfer that was not properly stamped, can cause the Registrar to return or reject the application.

Our team plans the conversion from the start, checks whether your company can convert, drafts the resolutions, consents and declarations, prepares and files the forms on the MCA portal and follows up with the Registrar until the fresh certificate of incorporation is issued. This page explains who the conversion suits, the legal conditions, the step-by-step process, the documents you will need, the timeline, our fee and what changes for your company after conversion.

Who Needs It

Converting a private limited company into an OPC is a good fit in situations such as these:

• A co-founder has exited. Where one of the two shareholders has left the business and the remaining founder wants to hold all the shares, the OPC structure removes the need to keep a nominal second shareholder.
• A family member holds a token share. Many small companies were incorporated with a spouse, parent or sibling holding a small number of shares only to meet the two-member rule. Conversion lets the real owner hold the company alone, with that family member possibly acting as nominee instead.
• Solo consultants and professionals. Freelancers, consultants and small service providers who operate through a private limited company and do not intend to bring in investors may find the OPC simpler to run.
• Owners who want fewer meetings and filings. An OPC enjoys certain relaxations, such as no requirement to hold an annual general meeting and a lighter board meeting requirement, which can reduce the time spent on paperwork.
• Businesses keeping limited liability. An owner who is thinking of shutting the company and running the business as a proprietorship may instead keep the protection of limited liability by converting to an OPC.

The conversion is not suitable for every company. If you plan to raise equity investment, issue employee stock options, bring in a second shareholder soon or run a Section 8 non-profit company, staying as a private limited company is usually the more practical choice. An OPC can always be converted back into a private or public company later, but converting back and forth adds cost and time, so we discuss your plans for the next few years before recommending this route.

Key Benefits

• One owner, one structure. The company's legal form reflects the fact that one person owns it, without the need to keep a second shareholder on the register.
• Limited liability continues. The sole member is liable only up to the amount unpaid on their shares, just as in a private limited company.
• Same legal entity. The company's PAN, TAN, bank accounts, property, contracts, licences and history carry on. You do not need to transfer assets or close the old company.
• No annual general meeting. Under section 96 of the Companies Act, 2013, an OPC is not required to hold an annual general meeting. Resolutions can be passed by the sole member and recorded in the minutes book.
• Lighter board meeting rules. An OPC with only one director does not need to hold board meetings in the usual way, and an OPC with more than one director needs to hold at least one meeting in each half of the calendar year, with a minimum gap of ninety days between them.
• Simpler financial statements. An OPC is not required to include a cash flow statement in its financial statements, and its annual return can be signed by the company secretary or, where there is none, by the director.
• Continuity through a nominee. The OPC must name a nominee who becomes the member if the sole member dies or becomes incapable of contracting, which provides a clear succession plan.

How the conversion works in practice. Think of the conversion as a change of the company's "class" rather than a new start. Before filing, the shareholding is brought down to a single individual by a share transfer from the other shareholder or shareholders. The members then pass a special resolution approving the conversion and altering the memorandum and articles. After that, the Registrar is asked to approve the change. Once approved, the Registrar issues a fresh certificate of incorporation in the new name, and the company carries on business as an OPC from that date.

OPC compared with a private limited company. Both structures offer limited liability and a separate legal identity. A private limited company can have up to 200 members, can issue shares to investors and is better suited to fundraising. An OPC has only one member, cannot carry out non-banking financial investment activities and cannot be converted into a Section 8 company, but it carries a lighter compliance load. The right choice depends on whether you expect to share ownership in the foreseeable future.

Eligibility and Legal Requirements

The main conditions for converting a private limited company into an OPC under the Companies Act, 2013 and the Companies (Incorporation) Rules, 2014 are:

• Not a Section 8 company. A company registered for charitable or non-profit purposes under section 8 cannot convert into an OPC.
• Capital and turnover conditions. The rules originally allowed only private companies within specified paid-up capital and turnover limits to convert into an OPC. The 2021 amendments to the rules relaxed the capital and turnover conditions for OPCs. We check the current wording of the rules at the time of filing and confirm that your company qualifies.
• Only one member. By the time the application is filed, the company must have a single member who is a natural person. All other shareholders must have transferred their shares to that person.
• Member eligibility. The sole member must be an individual who is a citizen of India. Since the 2021 amendments, the member may be resident in India or a non-resident Indian citizen. For this purpose, a person is treated as resident in India if they have stayed in India for at least 120 days during the immediately preceding financial year.
• One OPC per person. An individual can be a member of only one OPC at a time, and can be a nominee in only one OPC at a time. If the proposed member already holds an OPC, this conversion cannot proceed in their name.
• Nominee. The member must name another individual, who is an Indian citizen, as nominee. The nominee's written consent in Form INC-3 is required. A minor cannot be a member or nominee.
• Directors. An OPC must have at least one director and can have up to fifteen without a special resolution. The sole member can also be the sole director.
• Consent of members and creditors. A no-objection or consent in writing must be obtained from all members and all creditors of the company before the application is made.
• Special resolution. The members must pass a special resolution in a general meeting approving the conversion, and the resolution must be filed with the Registrar in Form MGT-14 within thirty days.
• Application to the Registrar. The company must apply in Form INC-6, attaching the documents required by rule 7, including a declaration by the directors.
• Restriction on business. An OPC cannot carry out non-banking financial investment activities, including investment in securities of any body corporate. A company engaged in these activities must address this before converting.

Company law rules and forms are updated from time to time. We check the current requirements at the time of filing so that your application reflects the latest position.

Step-by-Step Guide

1. Eligibility review. We study your company's master data, shareholding, financial statements, borrowings and business activity to confirm that the company can convert. We also check whether the proposed sole member already holds or is a nominee in another OPC.
2. Planning the share transfer. We work out how the shares held by the other shareholder or shareholders will move to the proposed sole member, including the transfer price, the stamp duty payable on the transfer and any income tax effect on the transferor.
3. Executing the share transfer. The transferor and transferee sign a share transfer deed in Form SH-4, stamp duty is paid, and the board approves and registers the transfer. The register of members is updated and the transfer is reflected in the company's records, and in the depository records if the shares are in demat form.
4. Collecting consents. We draft written no-objection letters to be signed by all members and all creditors, and help you obtain them. We also prepare the nominee's consent in Form INC-3.
5. Board meeting. The board meets to approve the proposal, the altered memorandum and articles, the notice of the general meeting and the authorisation of a director to file the forms.
6. General meeting and special resolution. The members pass a special resolution approving the conversion, the change of name to include "(OPC) Private Limited", and the alteration of the memorandum and articles. Shorter notice can be used where the members consent as allowed by law.
7. Filing Form MGT-14. The special resolution, the explanatory statement and the altered documents are filed with the Registrar in Form MGT-14 within thirty days of the resolution.
8. Filing Form INC-6. We prepare and file the conversion application in Form INC-6 with all attachments, signed digitally by the director and certified by a practising professional where required. Government fees are paid online at actual.
9. Scrutiny by the Registrar. The Registrar examines the application. If any change or clarification is needed, a resubmission request is issued. We make the corrections and refile within the time allowed.
10. Fresh certificate of incorporation. Once satisfied, the Registrar approves the conversion and issues a fresh certificate of incorporation showing the new name. We share the certificate and the approved documents and guide you on updating your records.

Documents Checklist

The exact list depends on your company's circumstances. Our team will confirm what applies before filing.

Company documents:

• Certificate of incorporation and any previous name change certificates
• Current memorandum and articles of association
• Latest audited balance sheet and profit and loss account
• List of members, and list of creditors as on a recent date
• Board resolution approving the conversion and authorising the filing
• Certified copy of the special resolution with the explanatory statement
• Altered memorandum and articles of association in the OPC format
• Directors' declaration confirming that all members and creditors have consented and that the conditions in the rules are met

Share transfer documents:

• Share transfer deed in Form SH-4, duly stamped and signed
• Original share certificates, or depository transfer records for demat shares
• Board resolution approving and registering the transfer
• Updated register of members

Consents:

• Written no-objection or consent from every member
• Written no-objection or consent from every creditor
• Nominee's consent in Form INC-3, along with the nominee's PAN and identity proof

For the sole member and nominee:

• PAN card
• Aadhaar, passport, voter ID or driving licence
• Recent address proof, such as a bank statement or utility bill
• Proof of residence period, where the member's residential status needs to be shown
• Digital Signature Certificate of the director signing the forms

How Long It Takes

A typical conversion from a private limited company to an OPC takes around 20 to 30 working days from the date we receive complete documents. The timeline breaks down roughly as follows:

• Eligibility review and planning: two to three working days.
• Share transfer and stamping: two to five working days, depending on the state's stamping process and whether the shares are physical or in demat form.
• Obtaining consents: this depends mainly on how many creditors the company has and how quickly they respond. A company with only a few creditors can complete this in a few days.
• Board and general meetings and MGT-14 filing: two to five working days, depending on whether shorter notice is used.
• INC-6 filing and Registrar processing: usually ten to fifteen working days, longer if a resubmission is requested.

Delays usually come from creditors who are slow to sign consents, share transfers that were not correctly stamped, inconsistencies between the company's filings and its financial statements, or pending annual filings that the Registrar expects to be completed first. We flag these early so they can be resolved before the application is filed.

Pricing

Our professional fee for Private to One Person Company is ₹ 7,999.

This fee covers:

• An eligibility review of your company and the proposed sole member
• Guidance on the share transfer process and drafting of related board resolutions
• Drafting of member and creditor consent letters and the nominee consent
• Drafting of the board resolution, notice of general meeting and special resolution
• Drafting of the altered memorandum and articles of association in the OPC format
• Preparation and filing of Form MGT-14 and Form INC-6
• Professional certification of forms where required
• Handling of resubmission requests on the same application
• Sharing the fresh certificate of incorporation and a post-conversion checklist

Government fees for the forms, and stamp duty on the share transfer and any altered documents, are payable at actual and are not part of our professional fee. Digital Signature Certificates, pending annual filings and post-conversion compliance are quoted separately where needed.

Common Mistakes to Avoid

• Filing before the shareholding is reduced. The company must have only one member when the application is made. Filing while a second shareholder is still on the register will lead to rejection.
• Unstamped or wrongly stamped share transfers. Stamp duty on the transfer must be paid correctly. An unstamped transfer deed can be challenged later and may delay approval.
• Missing creditor consents. Every creditor's written consent is needed, including trade creditors and lenders. Leaving out even one can cause the Registrar to return the application.
• Choosing an ineligible member or nominee. The member and nominee must be individuals and Indian citizens, and neither can already be a member or nominee of another OPC. These points should be checked before the share transfer.
• Forgetting the MGT-14 filing. The special resolution must be filed within thirty days. Missing this deadline leads to additional fees and holds up the INC-6 application.
• Ignoring pending compliances. If annual returns or financial statements are overdue, the Registrar may not approve the conversion until they are filed.
• Not updating the name everywhere. After conversion, the new name must appear on letterheads, invoices, seals, signboards and contracts. Using the old name can cause problems with banks and customers.
• Overlooking investment activities. An OPC cannot carry out non-banking financial investment activities. A company holding significant investments should review this before converting.

What Happens After

Once the Registrar issues the fresh certificate of incorporation, the company operates as an OPC. Several follow-up steps are needed:

• Update the company's name on its PAN and TAN records, bank accounts, GST registration, professional tax and shops and establishments registrations, import export code and any other licences.
• Update letterheads, invoices and signboards to show the new name with "(OPC) Private Limited" and the words "One Person Company" below the name wherever required by law.
• Inform customers, suppliers and lenders about the change of name and class, and update contracts where needed.
• Maintain the minutes book for resolutions passed by the sole member, since resolutions that would otherwise be passed at a general meeting are recorded and signed instead.
• Hold board meetings as required. If the OPC has more than one director, at least one meeting must be held in each half of the calendar year.
• File annual filings. The OPC must still file its financial statements and annual return with the Registrar each year, have its accounts audited, and file its income tax return and GST returns where applicable.
• Keep the nominee details current. If the nominee changes, the change must be intimated to the Registrar in the prescribed form within the time allowed.
• Plan for growth. An OPC can voluntarily convert into a private or public company at any time, subject to the conditions in the rules, if you later bring in more shareholders.

Our team can take care of the annual compliance of your OPC so these filings are completed on time.

FAQs

Will my company get a new CIN or PAN after conversion?

The company remains the same legal entity, so its PAN and TAN continue. The Registrar issues a fresh certificate of incorporation reflecting the new name and class, and the Corporate Identity Number may be updated to reflect the change in class. We help you update your records with all authorities.

Can a company with two directors convert into an OPC?

Yes. An OPC can have more than one director. What matters is that there is only one member. The second person can continue as a director if you wish, or resign through the usual process.

Who can be the nominee of an OPC?

The nominee must be an individual who is an Indian citizen and not a minor. The nominee gives written consent in Form INC-3. A person can be a nominee in only one OPC at a time, and the member can change the nominee later by following the prescribed procedure.

Does the conversion affect the company's bank accounts and contracts?

No. Because the company continues as the same legal entity, its bank accounts, contracts, property and licences remain with it. You only need to inform the bank and other parties of the new name and provide the fresh certificate.

Is the consent of every creditor really necessary?

Yes. The rules require written consent from all members and all creditors. This protects creditors whose dealings may be affected by the change. We prepare simple consent letters and help you collect them.

Can a non-resident Indian be the sole member?

Since the 2021 amendments, an Indian citizen who is not resident in India can be the member of an OPC. Foreign nationals cannot be members of an OPC. If you are unsure about your status, speak with our team so we can check the current rules for your case.

What if the other shareholder does not want to sell their shares?

The conversion cannot go ahead unless all other shareholders transfer their shares to the proposed sole member. If a shareholder is unwilling, the matter has to be resolved commercially first, for example through negotiation on the transfer price.

Is there any tax on the share transfer?

The shareholder transferring the shares may have a capital gain or loss depending on the transfer price and the original cost. Stamp duty is also payable on the transfer. We recommend discussing the tax effect with your tax adviser before finalising the price.

Can an OPC be converted back into a private limited company?

Yes. An OPC can voluntarily convert into a private limited company or a public company by following the procedure in the rules, including increasing the number of members and directors as required for the new class.

Do I need an annual general meeting after conversion?

No. An OPC is not required to hold an annual general meeting. Matters that would normally be dealt with at an annual general meeting are recorded as resolutions of the sole member in the minutes book.

Will the company still need a statutory audit?

Yes. An OPC must have its accounts audited by a chartered accountant every year and file its financial statements with the Registrar, just like a private limited company.

What happens to the OPC if the sole member dies?

The nominee becomes the member of the company, which allows the company to continue. The new member must then appoint a new nominee. This is one of the reasons why choosing a suitable nominee is important.

Can we convert if the company has pending annual filings?

It is advisable to complete all pending filings first. The Registrar reviews the company's compliance status, and overdue filings can lead to the conversion application being held up or rejected.

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