Procedure For Conversion of OPC Into Private or Public Company

     

A One Person Company can be converted into other kind of company under two conditions:

    (a) Voluntary Conversion:  No such company can convert voluntarily into any kind of company unless two years is expired from the date of incorporation of One Person Company.[Rule 3(7) of The Companies (Incorporation) Rules, 2014]

    (b) Mandatory Conversion: Where the paid up share capital of an One Person Company exceeds fifty lakh rupees or its average annual turnover during the relevant period (the period of immediately preceding three consecutive financial years) exceeds two crore rupees, it shall cease to be entitled to continue as a One Person Company.

Such One Person Company shall be required to convert itself, within six months of the date on which its paid up share capital is increased beyond fifty lakh rupees or the last day of the relevant period during which its average annual turnover exceeds two crore rupees as the case may be, into either a private company with minimum of two members and two directors or a public company with at least of seven members and three directors in accordance with the provisions of section 18 of the Act.[Rule 6 of the Companies (Incorporation) Rules, 2014]

Procedure For Conversion of OPC Into Private or Public Company

Step 1: Convene and hold Board Meeting after giving notice to all the directors as per Section 173 to consider the following matters:

a. To discuss with directors that the company has exceeded the prescribed threshold limit of paid up share capital or turnover.

b. Authorising any director to file Form INC-5 giving notice to the Registrar that the company has ceased to be entitled to continue as a One Person Company.

c. To increase the number of directors i.e. with minimum of two directors for private company and with minimum of three directors for public company. (Where the number of directors are below the requirement of the act).

d. To increase the number of members i.e. with minimum of two members for private company and with minimum of seven members for public company. (Where the number of members are below the requirement of the act).

e. To get shareholder’s approval for alteration in clauses of Memorandum of Association and Article of Association of the company. 

Step 2: File E- Form MGT-14 with Registrar within 30 days of passing of Special      Resolution with the following attachments:

a. Certified True copy of Special Resolution along with Explanatory Statement.

b. Altered copy of MOA and AOA.

Step 3: File E-Form INC-5 within 60 days from the date of enhancement of the ceiling limit to Registrar with the following attachments:

a. Copy of board resolution authorizing giving notice.

b. Copy of the duly attested financial statement.

c. Certificate from a Chartered Accountant in practice for calculation of average annual turnover during the relevant period – This certificate is mandatory to attach if the threshold limit is exceeded on account of average annual turnover.

d. Any other information can be provided as an optional attachment(s).

Step 4: File E-form INC-6 within 6 months from the date of exceeding the threshold limit with the following attachments:

a. Altered Memorandum of association.

b. Altered Articles of association.

c. Copy of the duly attested latest financial statement.

d. Copy of board resolution authorizing giving of notice.

e. It is mandatory to attach a certificate from Chartered Accountant if the conversion is, because of exceeding average annual turnover.

Step 5:Obtain from the Registrar of Companies, fresh Certificate of Incorporation consequent upon Conversion of One Person Company into Private/public Company.

In case of voluntary conversion of One Person Company to Private Company or Public Company, the procedure abovementioned shall be same but the requirement for filing Form INC – 5 shall not be applicable.

Related Post :

Procedure For Incorporation of OPC

Draft Board Resolution for Conversion of Private Limited Company into OPC

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