A one person company (OPC) can be lawfully converted into a public or private limited company, voluntarily or mandatorily.
An OPC shall be compulsorily required to convert itself into a public or private limited company, if:
- its total paid up capital exceeds INR 50 Lakh; or
- its annual turnover exceeds INR 2 Crore
If the OPC attracts the any of the threshold limit, such OPC shall alter its Memorandum and Articles by passing a resolution in General Meeting according to Companies Act, 2013.
The OPC is required to give notice to the registrar in Form no. INC-5 informing that it has ceased to be an OPC and it is required to convert itself into a public or private company within 60 days from the date of applicability of above conditions.
An OPC cannot be converted into a private or public company, up to two years from its incorporation.
The procedure of voluntary conversion of an OPC as prescribed by relevant law is prescribed below:
- At the time of conversion, the total paid up capital should be more than or equal to INR 50 Lakh, and its average annual turnover should be more than INR 2 Crore.
- An OPC can get itself converted into a Private or Public company after increasing the minimum number of members and directors to two or minimum of seven members and two or three directors as the case may be.
- The OPC is required to pass a resolution in general meeting and copy of such resolution must be sent to the concerned ROC within 30 days of passing it.
- The company shall file an application in Form INC-6 for its conversion by payment of prescribed fee and documents as mentioned below:
- the directors of the company shall give a declaration by way of affidavit
- List of members
- List of creditor and a copy of No Objection letter from creditors, if any
- The latest audited balance sheet and the profit and loss account