Conversion of Private Limited Company to One Person Company (OPC) in Chennai

A Private Limited Company is ideal for businesses seeking scalability and external investments, but it comes with high compliance requirements. If you're a sole entrepreneur looking for complete control over your business with lower compliance burdens, converting your Private Limited Company into a One Person Company (OPC) can be a smart choice. Governed by the Companies Act, 2013, this conversion allows a single shareholder to operate as a corporate entity while enjoying limited liability, tax benefits, and ease of management. However, the process requires approval from the Ministry of Corporate Affairs (MCA) and compliance with certain financial and structural conditions.

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What is an OPC?

An OPC is a business structure in which one person is allowed to form a company. Governed by the provisions of the Companies Act, 2013, OPC offers the benefits of limited liability protection, fewer compliance requirements, complete control over the business, and a separate legal entity. This model is ideal for small business owners who wish to start their business independently without involving partners or shareholders.

Why Convert a Private Limited Company into an OPC in Chennai?

Converting a Private Limited Company to an OPC provides several benefits, such as:

Single Ownership & Control: OPC allows a single entrepreneur to be the sole shareholder and decision-maker.
Lower Compliance Requirements: OPCs have fewer annual filings and legal compliances compared to Private Limited Companies.
No Minimum Capital Requirement: Unlike the Private Limited Companies, OPCs do not have a minimum capital requirement.
Limited Liability Protection: The owner’s personal assets remain protected, as liability is limited to the business assets.
No Need for Multiple Directors: Only one director is required to run an OPC.
Exemption from Certain MCA Filings: OPCs enjoy relaxations in filing the annual compliance requirements and audits with the MCA.

Legal Framework Governing Conversion

The conversion of a Private Limited Company to an OPC is governed by the following:

Companies Act, 2013 (Section 18 & Section 122(1)): It governs the legal process of converting a Private Limited Company to an OPC.
Companies (Incorporation) Rules, 2014: It specifies the eligibility conditions and documentation required for conversion.
MCA (Ministry of Corporate Affairs) Guidelines: It outlines the procedural steps for conversion and post-conversion compliance.

IMPORTANT NOTE: A company cannot convert into an OPC if its paid-up capital exceeds ₹50 lakh or its annual turnover exceeds ₹2 crore.

Eligibility Criteria for Conversion

To convert a Private Limited Company into an OPC, the following conditions must be met:

Single Shareholder Requirement: The company must have only one shareholder after conversion.
Shareholder of the new OPC must be a resident of India, i.,e, the shareholder must have stayed in India for at least 180 days in a calender year.
Turnover & Capital Limitations: The company’s paid-up share capital must be ₹50 lakh or below, and annual turnover must be ₹2 crore or below in the last three financial years.
No Ongoing Financial Liabilities: Before conversion, the company must have cleared all outstanding debts, taxes, and liabilities.
Approval from Shareholders: A Special Resolution must be passed, and shareholders must approve the conversion.
No Existing OPC Holding Shares: An OPC cannot be converted into another OPC or hold shares in another OPC.

Documents Required for OPC Conversion in Chennai

The following documents are required for conversion:

Certificate of Incorporation (COI): Original incorporation certificate of the Private Limited Company.
Memorandum of Association (MoA) & Articles of Association (AoA): Updated MoA & AoA reflecting the OPC structure.
Board Resolution & Special Resolution Copy which approve the conversion.
Affidavit from Director & Shareholder confirms compliance with OPC conversion rules.
Declaration by Director (Form INC-9) stating that the company meets OPC eligibility criteria.
Statement of Assets & Liabilities: The audited the financial statement for the latest financial year.
NOC from Creditors & Stakeholders, which gives approval confirming no financial liabilities or objections.
PAN Card & Address Proof of Sole Shareholder: Aadhaar, Passport, or Voter ID of the OPC’s sole owner.

Step-by-Step Process for Converting a Private Limited Company to an OPC in Chennai

Follow the steps below to convert your Private Limited Company into an OPC:

Step 1: Conduct Board Meeting & Pass Resolution
The Board of Directors must hold a meeting to approve the conversion and authorize a director to initiate the process.
Step 2: Obtain Shareholders’ Approval (Special Resolution)
Conduct an Extraordinary General Meeting (EGM) to pass a Special Resolution (SR) approving the conversion. It is pertinent to obtain the approval for the alteration of the MoA and AoA during the meeting
Step 3: File e-forms with the RoC

File Form MGT-14 with the Registrar of Companies (RoC) within 30 days of passing the resolution

Step 4: File Application for Conversion (Form INC-6)
Submit Form INC-6 to the RoC along with required documents, including MoA, AoA, Special Resolution, and financial statements.
Step 5: RoC Verification & Approval
The RoC will review the application and ensure compliance with the Companies Act. If approved, the RoC will issue a New Certificate of Incorporation as an OPC.
Step 6: Update Business Licenses & Tax Registrations
Once the conversion is complete, update GST, PAN, TAN, bank accounts, contracts, and all business licenses to reflect the OPC status.

Post-Conversion Compliance for OPCs

Conversion of a Private Limited Company into an OPC is not the end. After conversion, the OPC must comply with the following requirements:

Obtain a new PAN Card for OPC
Update letterheads, invoices, and other official documents reflecting the conversion
Update the Back Account details to reflect the new OPC status
File Annual Returns (Form AOC-4 & MGT-7A): Submit financial statements and annual returns with the RoC.
Appoint a Nominee: An OPC must appoint a nominee who will take over in case of the sole director’s incapacity.
Maintain Proper Financial Records: Ensure proper bookkeeping and financial statements are maintained.
Notify the GST department, Income Tax Department, and other regulatory bodies to whom your business is responsible for reporting.
No Voluntary Conversion Before 2 Years: An OPC cannot voluntarily convert into a Private Limited Company before two years of incorporation unless it crosses the turnover or capital limit.

Why Choose Chennai Filings for OPC Conversion in Chennai?

At Chennai Filings, we make the conversion of a Private Limited Company to an OPC seamless and legally compliant. We provide:

Expert Legal Assistance: We handle the entire legal process, from documentation to approvals.
Hassle-Free RoC Filings: Our experts ensure quick documentation preparation that is ready for approval from the Registrar of Companies (RoC).
Transparent & Affordable Pricing: No hidden costs, transparent pricing, and only genuine legal support.
Post-Conversion Support: We assist with tax filings, business registrations, and compliance.

Looking to transition into a One Person Company (OPC)? Let Chennai Filings assist you with a hassle-free and legally compliant conversion.

FAQ's

1. Can any Private Limited Company convert into an OPC?

No, only a Private Limited Company with ₹50 lakh or less paid-up capital and ₹2 crore or less turnover can convert into an OPC.

2. How long does the conversion process take?

It usually takes 15-60 working days, depending on RoC approvals.

3. Is there any tax benefit in converting to an OPC?

There is no direct tax benefit, but compliance costs are lower in an OPC than in a Private Limited Company.

4. Can an OPC raise investment from venture capitalists?

No, OPCs cannot issue shares, making them unsuitable for venture capital funding.

5. What happens if an OPC exceeds the turnover or capital limit?

The OPC must be mandatorily converted into a Private Limited Company if turnover exceeds ₹2 crore or capital exceeds ₹50 lakh.