WHAT IS ONE PERSON COMPANY (OPC)
As per section 2(62) of the Companies Act, 2013 One person company means a Company that has only one person as a Member.
WHAT IS PRIVATE COMPANY
As per Section 2(68) of Companies Act, 2013 a Private Company is a Company which by its articles
- Restrict the transfer of its shares
- Except in case of One Person Company, limits the number of its members to two hundred.
- Prohibits any invitation to the public to subscribe for any securities of the company.
HOW A ONE PERSON COMPANY (OPC) CAN BE CONVERTED INTO PRIVATE LIMITED OR PUBLIC LIMITED COMPANY?
As per section 18 of the Companies Act, 2013
(1) A company of any class registered under this Act may convert itself as a company of other class under this Act by alteration of memorandum and articles of the company in accordance with the provisions of this Chapter.
(2) Where the conversion is required to be done under this section, the Registrar shall on an application made by the company, after satisfying himself that the provisions of this Chapter applicable for registration of companies have been complied with, close the former registration of the company and after registering the documents referred to in sub-section (1), issue a certificate of incorporation in the same manner as its first registration.
(3) The registration of a company under this section shall not affect any debts, liabilities, obligations or contracts incurred or entered into, by or on behalf of the company before conversion and such debts, liabilities, obligations, and contracts may be enforced in the manner as if such registration had not been done.
WHAT ARE THE METHOS OF CONVERSION OF ONE PERSON COMPANY (OPC) INTO PRIVATE OR PUBLIC COMPANY
One Person Company (OPC) can be converted in the following 2 ways but it cannot be incorporated and converted in sec 8 companies
Such a Company cannot carry out Non-Banking Financial Investment activities including investment in securities of anybody corporates.
WHAT IS VOLUNTARY CONVERSION OF OPC
As per section 3(17) of the Companies (incorporation) Rules, 2014 a company can apply for the voluntary conversion of One Person Company( OPC) only after expiration of 2 years from the date of Incorporation.
WHAT IS MANDATORY CONVERSION OF OPC
As per section 6 of the Companies (incorporation) Rules, 2014 a One Person Company ( OPC) need to be converted Mandatory on the occurrence of the following situation
- If the Paid capital of the OPC exceeds Fifty lakh rupees.
- If the average annual turnover of the preceding 3 years exceeds two crore rupees.
WHAT are THE STEPS REQUIRED FOR CONVERSION?
Step: 1 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 a 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 Companies Act, 2013
Step: 2 The One Person Company shall alter its memorandum and articles by passing a resolution in accordance with sub-section (3) of section 122 of the Act to give effect to the conversion and to make necessary changes incidental thereto.
Step: 3 The One Person Company shall within a period of sixty days from the date of applicability of sub-rule (1), give notice to the Registrar in Form No.INC.5 informing that it has ceased to be a One Person Company and that it is now required to convert itself into a private company or a public company.
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