If you are running a Private Limited Company and now
only one person is actively managing and holding the business, converting it
into a One Person Company can make things simpler. Many companies are formed
with two shareholders just to meet legal requirements. Over time, one
shareholder may exit and the business continues under one individual. In such a
situation, continuing as a Private Limited Company may feel unnecessary.
Let us understand the full process in clear and
practical language, step by step, including documents, forms, affidavits,
creditor consent, and government fees.
First check whether your company is eligible
Before starting the conversion, confirm these basic
conditions:
- The company must be a Private Limited Company.
- Only one member should exist before filing Form INC 6.
- A nominee must be appointed.
- There should be no default in filing Financial Statements or Annual Returns.
- The company must not be registered under Section 8.
- There is no capital or turnover restriction after the 2021 amendment.
Stage I – Reduction of Members to One
This is the most important practical step. Before
applying for conversion, the company must legally have only one shareholder.
First, check the Articles of Association. Some
companies include restrictions on share transfer. Make sure the transfer is
allowed as per the AOA.
Next, execute the Share Transfer Deed in Form SH 4.
The outgoing shareholder transfers shares to the remaining member.
Stamp duty must be paid on the share transfer. Stamp duty depends on
state laws, so check the applicable rate.
After that, conduct a Board Meeting to approve the
share transfer.
Once approved, update the Register of Members in Form
MGT 1.
Finally, issue a new share certificate within one
month from the date of transfer.
After completing these steps, only one shareholder
remains. Now the company is ready to proceed for conversion into OPC.
Documents required from Sole Member
The remaining member must provide the following documents:
- PAN Card which is mandatory
- Aadhaar, Passport, Voter ID or Driving License
- Address proof such as Bank Statement or Utility Bill not older than two months
- Passport size photograph
- Email ID and Mobile Number
- These details are required for filing INC 6 and for appointing the nominee.
Documents required from Proposed Nominee
An OPC must have a nominee. If the sole member dies or becomes incapable of managing affairs, the nominee becomes the member.
- The nominee must provide:
- PAN Card which is mandatory
- Aadhaar, Passport or Voter ID
- Address proof not older than two months
- Passport size photograph
- Email ID and Mobile Number
- Consent in Form INC 3 which must be digitally signed
- The nominee must be a natural person, Indian citizen and resident in India.
Stage II – Conversion into OPC
After reducing the members to one, start the formal
conversion process.
First, hold a Board Meeting. In this meeting, approve
the proposal for conversion, approve the altered Memorandum and Articles in OPC
format, and call an Extra Ordinary General Meeting.
Second, conduct the General Meeting and pass a
Special Resolution approving conversion into OPC.
Third, file Form MGT 14 within 30 days of passing the
Special Resolution. For a capital of three lakh rupees, the filing fee is three
hundred rupees.
Fourth, file Form INC 6 for conversion. The filing
fee in this case is also three hundred rupees.
Attachments required with INC 6
- Altered Memorandum of Association in OPC format
- Altered Articles of Association in OPC format
- Copy of Special Resolution
- Copy of Board Resolution
- Latest Financial Statements
- List of Members showing only one member
- All documents must be consistent. Any mismatch in shareholding details can result in resubmission.
Director Affidavit
An affidavit from all Directors is mandatory. It must
confirm that all members and creditors have given consent for conversion. It
must also confirm that the company has only one member at the time of filing
INC 6.
The affidavit should state that the company has not defaulted in filing
financial statements or annual returns, that it is not registered under Section
8, and that all provisions of the Companies Act 2013 and applicable rules have
been complied with.
Draft this affidavit carefully. It is a declaration
of compliance.
No Objection Certificate from Creditors
A list of creditors should be prepared and certified by a Director or Chartered Accountant. This certified list must be attached with INC 6.
If any bank loan or charge exists, written NOC from the bank or financial institution is advisable. In practice, ROC pays close attention to creditor consent.
Government Fees
For a company with capital of three lakh rupees:
- MGT 14 filing fee is three hundred rupees
- INC 6 filing fee is three hundred rupees
- Stamp duty on SH 4
Professional fees may be separate depending on who handles the filing.
Time required
If documents are ready and there is no resubmission, the process can usually be completed within ten to fifteen working days. Share transfer formalities may take a few days. Meetings and resolutions may take another few days. ROC approval generally depends on workload and correctness of documents.
Advantages of converting into OPC
Compliance requirements are lighter compared to a
Private Limited Company. There is no requirement to hold Annual General
Meeting. Only one member is required. Control remains fully with one individual
while enjoying limited liability.
For small business owners operating alone, OPC
structure is often more practical.
Frequently Asked Questions
Can a company with two members directly file INC 6?
No. First reduce the number of members to one through proper share transfer.
Only then can INC 6 be filed.
Is there any capital limit for conversion?
No. There is no capital or turnover restriction after the 2021 amendment.
Is creditor consent mandatory?
Yes. Consent from creditors is required and must be confirmed through affidavit
and attached documents.
Is filing MGT 14 compulsory?
Yes. Since a Special Resolution is passed, filing MGT 14 within thirty days is
mandatory.
Who can be a nominee?
Only a natural person who is an Indian citizen and resident in India can be
appointed as nominee.
Can a company with pending annual filings convert
into OPC?
No. All pending financial statements and annual returns must be filed first.
Can a Section 8 company convert into OPC?
No. A company registered under Section 8 cannot convert into OPC.
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