Can One Person Company be converted to private or public limited company

One Person Company or OPC can be formed in India by a natural person who must be an Indian citizen and resident of India. Such OPCs are provided with simpler legal and governance regime for their operations and lesser compliance requirements relating to general meetings and board meetings.

But, the question is Can One Person Company be converted to private or public limited company after incorporation. Is conversion allowed legally in Companies Act 2013? If such conversion is allowed then when and how One Person Company can be converted to private or public limited company.

Can one person company be converted to private limited company

Compulsory conversion of One Person Company to Private or Public Limited Company

As per the Companies (Incorporation) Rules, 2014, One Person Company will cease to exist when it’s paid up share capital exceeds 50 lakhs rupees or average annual turnover of immediately preceding 3 consecutive financial years exceeds 2 Crores rupees.

This means, One Person Company or OPC has to compulsorily get converted either to a private or public limited company when it exceeds the above limit.

One Person Company has to compulsorily get converted to private or public limited company within 6 months from the date on which paid up share capital increased beyond 50 lakhs rupees or the last date of the relevant period during which its average annual turnover exceeds 2 Crore rupees.

Voluntary conversion of One Person Company to Private or Public Limited Company

Voluntary conversion into any kind of companies is not allowed unless 2 years expired from the date of incorporation of One Person Company or OPC. However, if the threshold limit of paid up share capital of rupees 50 lakhs or average turnovers of rupees 2 Crores exceeded then within 2 months, OPC can be converted into private or public limited company.

One Person Company or OPC has to intimate voluntary conversion in form INC5 to registrar of companies within 60 days.

For conversion to private limited company, One Person Company is required to have two directors and two members. To convert to public limited company, OPC requires at least seven members and three directors.

Also read: When and how to convert a private limited company to OPC

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