One Person Company (OPC) refers to a form of company that has only one person as a member, unlike a private company where the minimum number of members is two or a public company where the minimum number of members is seven. Section 18 of the Companies Act, 2013 and Rule 6 of the Companies (Incorporation) Rules, 2014, explicitly provide provisions for the conversion of One Person Company (OPC) to other forms of the Company, as the case may be.
Section 18 of the Companies Act, 2013 and the provisions of the Companies (Incorporation) Rules of 2014 (‘Rules’) allow a One Person Company (OPC) to be converted into a Private Limited Company. The OPC’s current debts, liabilities, commitments, or contracts will not be affected by the firm’s conversion to a private limited company.
Changes to the OPC’s Memorandum of Association (MOA) and Articles of Association (AOA) are required for conversion (As per the provisions provided in section 18 of the Companies Act, 2013, along with section 122 of the Act).
The company’s directors would be given an affidavit confirming that all of the company’s members and creditors have given their consent for the conversion and that the company’s paid-up share capital is less than INR 50 lakhs rupees or its average annual turnover is less than INR 2 crores rupees, as the case may be;
The list of creditors and members
The most current audited balance sheet and profit and loss account
A copy of the secured creditors’ No Objection Certificate.
The One Person Company was created in the legal system to encourage entrepreneurs to enter the corporate sector. It will not only allow individuals to contribute to economic growth, but it will also create job prospects.
The abolition of the minimum capital and turnover thresholds allows the OPC to obtain international investments without conversion restrictions. It allows OPC to convert voluntarily rather than mandatory after capital requirements are met.