X & Co. was incorporated in March 2018 as a One Person Company. During the financial year ending March 2019, the Company achieved a turnover of ₹ 5 Crore. Advise the Company as to whether there is any contravention o

As per Rule 3(7) of the Companies (Incorporation) Rules, 2014, no one person company (OPC) can convert voluntarily into any kind of company unless two years have expired from the date of incorporation of one person company, except when threshold limit (paid-up share capital) is increased beyond ₹ 50 lakhs or its average annual turnover during the relevant period exceeds ₹ 2 crores. In terms of Rule 6 of the said Rules, where the average annual turnover of the company exceeds ₹ 2 crores, it shall cease to be entitled to continue as One Person Company. Such one person company shall within a period of 60 days from the date of applicability, give a notice to the Registrar in e-form INC-5 informing that it has ceased to be a one person company and that it is now required to convert itself into either a private company or a public company by virtue of its average annual turnover having exceeded the threshold limit. Such one person company shall be required to convert itself, within six months from the last date of the relevant period during which its average annual turnover exceeds ₹ 2 crores, into either a private company with minimum of two members and two directors or a public company with at least seven members and three directors. Rule 7A provides that where a one person company or any officer of such company contravenes any of the provisions of these rules, the one person company or any officer of such company shall be punishable with fine which may extend to five thousand rupees and with a further fine which may extend to five hundred rupees for every day after the first offence during which such contravention continues. Accordingly, in terms of Rule 6 of the Companies (Incorporation) Rules, 2014, X & Co. OPC, needs to convert itself into a Private company or a Public company within a period of 6 months from the end of the Financial Year ended 31 st March, 2019, failing which it shall be liable for penalty under Rule 7A of the said Rules.