Bring shareholders in, raise equity and issue ESOPs. Since the 2021 amendment there is no turnover or capital threshold to cross first: an OPC can convert voluntarily whenever it chooses to.
A few details, then secure checkout. Your expert takes it from there.
Starting at₹22,599+ Govt. Fees
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What changes when the second shareholder arrives, what happens to the company’s existing rights and liabilities, and why owners choose LegalWiz.in.
Converting a One Person Company into a private company opens routes that a single-member structure cannot use, fundraising above all. An OPC may now convert voluntarily without satisfying any criterion of paid-up share capital or average annual turnover.
The application is made to the Central Government after the MoA and AoA of the OPC have been altered. The legal existence of the company continues through the conversion, and so do its rights and its liabilities. Nothing is extinguished and nothing is transferred.
On converting, a minimum of two shareholders and two directors must be appointed to meet the private company requirement. What that buys is growth: private placement funding, ESOPs and the other ways of raising money the structure allows.
Your relationship manager and the filing team handle everything below. You supply the documents once and approve the drafts.
Government fees are charged at actuals. Two shareholders and two directors have to be in place to meet the private company requirement, so the incoming person’s details and consent are needed before the filing.
An OPC needs a nominee because it has one member. With a second shareholder the requirement falls away.
An OPC cannot transfer its shares. In a private company they move between members freely, and to a non-member once existing members decline them.
A board meeting every three months and an annual general meeting each year, neither of which an OPC has to hold.
The company’s legal existence continues unbroken, and its rights, debts and obligations are entirely unaffected.
Raising money as a private limited company is comparatively straightforward, because it can issue shares and has several routes open to it: private equity, ESOPs and more.
The obligations or debts of the company create no charge over the owners’ personal assets. Their liability is limited to the capital they have subscribed and not yet paid.
An OPC is capped at a single member and its shares cannot be transferred. A private company takes up to 200 shareholders, and ownership can move between them with the shareholders’ consent.
A registered private limited company is a legal entity in the eyes of the law, separate from its owners and its managers. It operates in its own name, from opening a bank account to owning assets and contracting with other parties, and it can sue a third party.
The two columns that matter to you are the first and the second. The rest are here because an OPC converting is occasionally better served by an LLP.
| Attribute | Private Limited Company | One Person Company | Limited Liability Partnership | Partnership Firm | Proprietorship Firm |
|---|---|---|---|---|---|
| Setting it up | |||||
| Applicable law | Companies Act, 2013 | Companies Act, 2013 | LLP Act, 2008 | Indian Partnership Act, 1932 | No specified Act |
| MandatoryMust be registered with the MCA under the Companies Act | MandatoryMust be registered with the MCA under the Companies Act | MandatoryMust be registered with the MCA under the LLP Act | OptionalCan be registered or unregistered, though there are clear benefits to registering with the State ROF | Not requiredMSME or GST registration is treated as valid proof for a proprietor firm | |
| 2 to 200Excluding present or former employees who are members | Only 1A single shareholder | 2 to unlimitedMinimum 2 designated partners, no cap on the total | 2 to 50Minimum 2 partners, maximum 50 | Only 1The proprietor is the sole owner | |
| AllowedUnder RBI and FEMA rules, usually via the automatic route | Not allowedMember, nominee and director must be Indian residents | AllowedUnder RBI and FEMA rules, usually via the automatic route | AllowedAn NRI can be a partner, subject to RBI regulations | Not allowedA foreign national cannot own a proprietorship business in India | |
| What you are liable for | |||||
| YesCan enter contracts and own assets in its own name | YesCan enter contracts and own assets in its own name | YesCan enter contracts and own assets in its own name | NoThe firm has no identity separate from its partners | NoProprietor and business are the same, and share one PAN | |
| LimitedLimited to the share capital subscribed, unless the MOA defines it otherwise | LimitedLimited to the share capital subscribed | LimitedLimited to the contribution agreed in the LLP agreement | UnlimitedPartners are jointly and severally liable for the debts | UnlimitedClearing the firm’s liabilities is the proprietor’s job | |
| YesSurvives a change of ownership or management | YesBut it can only ever have one owner | YesA change of partners does not affect the LLP | NoA change of partner dissolves or reforms the firm | NoDeath or insolvency of the proprietor ends the business | |
| YesShares transfer easily, which is why external investors prefer it | Restricted100% of shares must move to change the single owner | YesBy consent of the other partners, via a supplementary deed | RestrictedThe partnership deed sets out the restrictions | NoA proprietorship cannot be transferred | |
| What it costs you every year | |||||
| MandatoryAn auditor must be appointed within 30 days | MandatoryAn auditor must be appointed within 30 days | As applicableRequired once turnover crosses ₹40 lakh or contribution crosses ₹25 lakh | Not mandatoryTax audit applies based on turnover | Not mandatoryTax audit applies based on turnover | |
| Moderate25% for companies with turnover up to ₹400 crore | Moderate25% for companies with turnover up to ₹400 crore | High30% on business profits, with tax-efficient distribution to partners | High30% on business profits | LowTaxed at the proprietor’s individual income tax slab | |
| HighThe heaviest of the five, both annual and event based | HighSimilar to a company, without an AGM | ModerateAnnual filing plus a few event based filings, lighter than a company | LowAn annual ITR, and little else | LowNo separate ITR, and very little else | |
| Next step | Get started | Know more | Know more | Know more | Know more |
Swipe the table sideways, Private Limited Company stays in view. Open any attribute to read the detail behind all 5 answers.
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The personal set covers the incoming shareholder and director. The last two are the company’s own papers.
For every shareholder and director. A foreign national must provide a passport instead.
The voter ID, passport or driving licence of every shareholder and director.
The telephone bill, electricity bill or latest bank statement of every shareholder and director.
A recent passport size photograph of every shareholder and director.
The documents of a shareholder or director who is an NRI or a foreign national must be notarised or apostilled.
A duly certified copy of the latest audited financial statements of the OPC.
The Certificate of Incorporation, and the MoA and AoA of the company.
Step 01
Step 02
Step 03
Subject to government processing time.
Up to twenty working days. The alteration of the MoA and AoA has to be approved before the conversion itself can be filed, which is what sets the shape of the schedule.
2 of 20 working days
6 of 20 working days
7 of 20 working days
5 of 20 working days
Subject to government processing time. The approval of the alteration is a wait on the Ministry and is the least predictable part of the schedule.
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None. Under Rule 6 of the Companies (Incorporation) Second Amendment Rules, 2021 there are no conditions that need to be satisfied.
Before that amendment, an OPC was required to convert if its paid-up share capital exceeded ₹50 lakh, or if its annual turnover exceeded ₹2 crore for three consecutive years. Neither threshold applies any more.
Yes, into a private company or a public company, provided the basic criteria are met.
For a private limited company, two directors and two shareholders are necessary. For a public company, a minimum of three directors and seven shareholders is mandatory under the Companies Act, 2013.
No. An OPC cannot be incorporated as, or converted into, a company for a non-profit or charitable purpose.
It also cannot carry out non-banking financial or investment activities, including investment in the securities of any body corporate.
They are not affected in any way. The company remains liable for all of its previous debts, obligations and liabilities.
The legal existence of the company continues through the conversion. It is the same company, in a different form.
The nominee requirement exists because an OPC has a single member. Once there are two or more shareholders, the company is no longer a One Person Company and the requirement falls away.
Only where the existing authorised capital does not accommodate the shares to be issued to the incoming shareholder.
Where it does, an increase is filed as part of the conversion. It is included in the scope of this service.
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No threshold to cross. Convert when growth calls for it.
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