One Person Company to Public Company

Q

OPC to Public Company

OPC (One Person Company) can be converted lawfully into Public limited company by virtue of law (mandatory conversion) or voluntarily after two years from incorporation.

Can an OPC convert into a Public Company?

Yes, One Person Company can be converted into public company as per the Companies Act, 2013 and Companies Rules, 2014. “Why we need to convert the One Person Company into any other form of business?” question comes in everyone’s mind. If a One Person Company over reaches the Threshold Limit then OPC has to convert into the public company or private company.

We have two ways to convert an OPC into a public company:

  • Voluntary Conversion- OPC cannot be converted voluntarily immediate after the incorporation. An OPC can go for voluntary conversion only after passing the two years from the date of incorporation as per the Companies Act, 2013 and Companies (Incorporation) Rules, 2014.
  • Mandatory conversion- When company cross the threshold limit then one person company lose its status and need to convert into public or private company within 6 months from the date on which the threshold limit is breached. When paid up share capital of one person company exceeds 50 lakhs rupees or average annual turnover exceeds two crore rupees which are a threshold limit for mandatory conversion into public limited company with minimum seven members and three directors or a private company with two members and two directors.

 

Advantages of public company over OPC

  • Issue the share to the general public through IPO.
  • Shares can be freely transferable by selling or buying in the stock market.
  • FDI (Foreign Direct Investment) is allowed.
  • The company has democratic management as company’s control is not confined to few people.
  • Unlimited scope of expansion and growth

 

Advantages of OPC over public company

  • One person alone can form a One Person Company
  • Sole owner has the complete control over the company
  • Lesser compliance burden on the One Person Company
  • Minimum requirement- one member cum director, one nominee
  • No provisions of AGM and EGM are applicable

Process of conversion of OPC into Public Company

  • Hold a board meeting stating:
    1. Obtain no objection from the member and director of the company for the application of the conversion.
    2. Approve notice of general meeting
  • Hold a general meeting stating:
    1. Pass a special resolution to approve the agenda of conversion.
    2. Alteration of AOA and MOA in accordance with the provisions of the act.
  • File the special resolution in form MGT-14 to ROC within 30days from the date of passing the special resolution in the general meeting. (In case of voluntary conversion)
  • For compulsory conversion, an OPC required to file the form INC-5 within 60 days from the day of exceeding the ceiling limit informing that company lose the status of OPC due to exceeding the threshold limit.
  • Pursuant to section 18 of the Companies Act, 2013 company have to file form INC-6 within 30 days from the date of passing the special resolution after filing the MGT-14 in case of voluntary conversion.
    In case of compulsory conversion file form INC-6 within 6 months from the date on which threshold limit exceeded, after filing the INC-5 and d same get approved by the ROC.
  • After submitting the required forms with the Registrar, a new certificate of incorporation has been issued.

 

 



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