OPC is a new concept in India which has been introduced by the Companies Act 2013. In case of one Person Company, only one person is required who can be a shareholder as well as director, whereas in the old Companies Act 1956, minimum of two directors and shareholders were required to form a private limited company.
In India, in the year 2005, the expert committee of Dr. JJ Irani recommended the formation of OPC.
SECTIONS/REGULATIONS/RULES/SCHEDULE APPLICABLE TO OPC
Section 2(62) of the Companies Act, 2013;
Companies Incorporation Rules, 2014 (Rule 3 to Rule 7); and
Schedule 1 of Companies Act 2013.
POSITION OF OPC UNDER COMPANIES ACT, 2013
DEFINE OPC AS PER SECTION 2(62) OF COMPANIES ACT 2013 READ WITH RULE 3 OF COMPANIES INCORPORATION RULE, 2014
“One Person Company” means a company which has one person as a member. It is a form of the company where the compliance requirements are lesser than that of a private company.
One Person Company
Only a natural person who is an Indian citizen and resident in India-
Shall eligible to incorporate an OPC:
Shall be a nominee for the sole member of an OPC
The term “resident in India” means a person who has stayed in India for not less than one hundred and eighty-two days during the immediately preceding financial year.
Who can be a Nominee?
The promoter while forming the company has to mention one person as his nominee during the incorporation of the company.
The nominee should be a natural person who is resident as well as a citizen of India. The nominee, in the event of the death of the promoter or due to his incapacity to contract become a member of that OPC. The nominee has to be appointed within 15 days of becoming a member of the company with his prior consent given in Form INC-3.
The person nominated by the member of a One Person Company may withdraw his consent by giving notice in writing to such member of OPC. The promoter within 15 days of receipt of such notice of withdrawal has to appoint a new nominee.
Further, the company within 30 days has to file with the Registrar:
Notice of withdrawal of consent
Name and details of another person nominated in Form INC-4 along with fees
Written consent of the new person so nominated in Form INC-3
FEATURES OF OPC
One of the main advantages of OPC is that it has more opportunities with limited liability as the liability of OPC is limited to the extent of the value of share it holds.
OPC is a separate legal entity and capable of doing everything that a businessman wants to do.
One Person Company can easily raise funds.
OPC has to require Minimum one Shareholder, one Director, and one Nominee. The director and shareholder can be the same person.
OPC enjoys little compliance burden as compared to a private limited company.
OPC always enjoy an increased trust and reputation in the Industry.
An OPC can be limited by guarantee or limited by shares or an unlimited company.
PRIVILEGES OF ONE PERSON COMPANIES
OPCs enjoy the following privileges and exemptions under the Companies Act:
One Person company need not hold any annual general meeting each year.
Provisions relating to meetings and quorum do not apply to them.
A company secretary is not required to sign annual returns; directors can also do so.
OPC cannot carry out Non-Banking Financial Investor activities including investments inthe security of body corporate.
OPC cannot be incorporated or converted into section 8 company under the Companies Act, 2013
A minor shall not eligible becoming a member.
Foreign citizen, Non-resident of India or any person who is incapacitated by contract shall not eligible becoming a member.
STEPS TO INCORPORATE OPC
There are two ways to get incorporation for OPC:-
Incorporation through SPICe (With RUN)
Incorporation through SPICe (Without RUN)
Incorporation through SPICe (With RUN)
Stakeholder applies to Name Reservation through RUN service for name availability.
After name approval, form SPICe shall be filed for incorporation of the OPC within 20 days from the date of approval of RUN.
The company shall file form INC-22 within 30 days once form SPICE is registered in case the address of correspondence and registered office address are not same.
Incorporation through SPICe (Without filing RUN) and the Documents Required
Stakeholder can avail of 5 different services i.e (Name reservation, Obtain Digital Signature certificate (DSC), Allotment of Director Identification Number (DIN), Incorporation of new Company, Allotment of PAN and Allotment of TAN) in one form by applying for Incorporation of a new company through SPICe form (INC-32)- Simplified Proforma for Incorporation of a new company electronically (SPICe) – with eMOA (INC-33), eAOA (INC-34).
In case of eMOA, eAOA are not applicable, then users are required to attach the pdf attachments of MoA and AoA.
There is no need for reserving a name separately before filing SPICe.
One name for the proposed company can be applied through SPICe (INC-32)
Documents required: We have to prepare the following documents which are required to be submitted to the ROC:
The Memorandum of Association (MoA) which are the objects of the company and also the stating the business.
The Articles of the Association (AoA) which lays down the laws on which company will operate.
INC-3 should be attached as scanned Document and it should be physically signed by the nominee.
DIR-2 (Consent of the proposed Director)
INC-9 (affidavit of the proposed Director)
Utility bill and NOC for registered office address
RESTRICTION ON INCORPORATION OF AN OPC
OPC cannot be incorporated or converted into Section 8 Company ( i.e. a company with charitable objects, etc.)
OPC cannot carry out Non-banking financial activities, including investment in securities of any body corporate.
IMPORTANT POINTS TO BE TAKEN WHILE INCORPORATING OPC
While incorporating OPC some points to be remembered;
OPC cannot be a subscriber to a company
Subscriber and Director need not be same in case of OPC
Minimum and Maximum number of members for One Person Company is one only.
The words “One Person Company” should be mentioned in the name of one person company.
CONVERSION FROM ONE PERSON COMPANY TO PRIVATE COMPANY OR A PUBLIC COMPANY AND VICE-VERSA(RULE 6 and RULE 7
It is provided in the Act that when a One Person Company reaches a paid-up Capital of 50 lakh rupees or more or when the average turnover of the Company which is Rs 2 Crores or more, then the company shall be converted into a private limited company after making the necessary changes in the memorandum of association and articles of association and shall comply with all the requirements of a private limited company.
If One Person Company or any officer of such company contravenes the provisions of these rules, One Person Company or any officer shall be punishable with fine which may extend to ten thousand rupees and with a further fine may extend to one thousand rupees for every day after the first during which such contravention continues.
OPC provides many opportunities to all those who are looking forward to kick start their own venture.
The Idea of One Person Company (OPC) in India was introduced to give a boost to entrepreneurs who have great potential to start their own venture by allowing them to create a single person company.
OPC is a new concept in India already sees a big boom to the industry. Since, no intervention from any third party is seen. It makes it more beneficial.
OPC will give the young businessman all the benefits in which a single person could constitute a Company with less considerable time, energy and resources.
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