Conversion of OPC into Private/Public Company

 

One Person Company (OPC) is a private limited company that has only one member, as opposed to private companies, which must have a minimum of two members, and public companies, which must have a minimum of seven members.

The conversion of a One Person Company (OPC) to other forms of the Company (Private Limited Company or Public Limited Company), is provided under Section 18 of the Companies Act of 2013 and Rule 6 of the Companies (Incorporation) Regulations of 2014.

 

When OPC is to be converted into a Private/public limited Company?

1)   Voluntary Conversion:

A voluntary conversion into a private/public limited company is not permitted unless two years have passed since the incorporation of the OPC.

However, if the One Person Company’s share capital exceeds Rs. 50 lakhs or its average turnover exceeds Rs. 2 crores, the One Person Company (OPC) may convert itself into a private limited company within two months.

In the event of a voluntary conversion, the One Person Company (OPC) must notify the Registrar of Companies (ROC) using form INC-5 within 60 days.

 

 

2)   Mandatory/Compulsory Conversion:

A One Person Company (OPC) must convert to Private/Public in the following scenarios:

Paid-up share capital exceeds Rs. 50 lakhs or the yearly turnover of the three most recent fiscal years is more than two crores rupees.

This conversion must be completed within 6 months of the date when the paid-up capital exceeds Rs. 50 lakhs or the related period when the average annual turnover exceeds Rs. 2 crores.

 

Amendment Effective From 1st April 2021

A One Person Company, may be converted into a Private or Public Company by increasing the minimum number of members and directors to two or seven members and two or three directors, as the case may be, and maintaining the minimum paid-up capital as required by the Act for such class of company, and by complying with Section 18 of the Act for conversion.