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One Person Company

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What is One Person Company

One Person Company (OPC) is a type of Company under the Companies Act, 2013. OPC is a company that has only one person as its member and another person as their nominee. It can also be said that an OPC is a blend of Proprietorship concern and a Company.

The Concept of One person company was introduced by Dr Jamshed J. Irani on Company Law dated 31st May 2005. One person company can be formed either as a company limited by share, Company Limited by guarantee or an unlimited company.

As person Section 2(62) of the Companies Act 2013, One person company means the company formed by one person. One person company compulsorily should get convert into Private Limited Company when Paid-up share capital exceeds rupees 50 lakhs or Turnover Crosses Rs. 2 crores.

Kinds of Formation of One Person Company

As per Section 3(2)  of the Companies Act 2013, One person company can be formed either as a:

  1. Company Limited by Shares
  2. Company Limited by Guarantee
  3. Unlimited Company.

One person company is a kind of Private Company as per Section 3(1)(c ).

Features of One Person Company

  1. There can only be one member in the case of One Person Company
  2. Appointment of Nominee in One person Company is compulsory, Nominee cannot be Minor.
  3. There is no Minimum Capital in case of One Person Company
  4. There is no Exemption and no board meeting is required.
  5. A person shall not be eligible to incorporate more than one OPC or become a nominee in more than one OPC.
  6. An OPC can be converted into any other type of company (Except section 8 company) only after two years from the date of incorporation of the OPC.

Formation of One Person Company

To Incorporate One person Company authorised share capital should be minimum of Rs 100000. Business involved in financial activities cannot be incorporated as a one-person company. In the case of one person company, there shall be minimum one member and one director in the case of section 2(62) of companies act 2013. One Person Company is a separate legal entity from its promoter.

As per section 3(1)(c ), One Person Company to be formed should be of a private company. In other words, one person company is the kind of Private Company. As per Section 3(2) Company can be formed as a Company limited by shares, Company limited by Guarantee or an Unlimited Liability Company.

One person company is exempt from holding an Annual General Meeting or Extraordinary General Meeting. In the case of One person company, a cash flow statement is not required.

List of Information  is Required to  set up One Person Company

Certain information is required to form One person company such as:

1) Name of the Company 

2) Postal address of the company and sole shareholder 

3) List of Activities the company is engaged will be. 

4) Name of the Sole Shareholder 

5) Name of Nominee including its postal address 

6) Name of director including its Postal Address.

List Of Documents Required For The Formation Of One Person Company

  1. One passport size photo of the sole shareholder, director(s) and nominee for the sole shareholder.
  2. PAN card of the sole shareholder, director(s) and nominee for the sole shareholder.
  3. Identity proof of the sole shareholder, director(s) and nominee for the sole shareholder (Any one of passport, voter id, driving license, Aadhar card)
  4. Address proof of the sole shareholder, director(s) and nominee for the sole shareholder (Should be in their name) (Any one of bank statement, electricity bill,  telephone bill, mobile bill, rent agreement in case of rented premises).
  5. Address proof of the place of business of the OPC (Rent agreement in case of rented premises, Index II or property tax paid receipt etc. in case of owned premises).

Note: The procedure, information and documents required to set up a Company may vary as per any amendments in the Companies Act, 2013 or the e-form filing procedures and requirements of MCA website.

The Procedure To Register The Opc Under Companies Act 2013?

Only a natural person can become a member of one person company and they should be a resident of India.

What is the steps to Form OPC:

Step 1 – Apply for DSC (Digital Signature Certificate)

MCA (Ministry of Corporate Affairs) has mandated Digital Signature for the following Individual:- Directors, Auditors, Company Secretaries, Bank officials and any other Authorized person.

Step 2 – Apply for Director Identification Number (DIN)

With the help of SPICe Form One can apply for DIN, However up to 3 director’s can apply, which is way better than applying through DIR-3 Form.

Step 3- Name approval Application

One can apply for name approval in 2 ways

  1. By making an Application in FORM SPICe 32
  2. or by using RUN Web Service of MCA by giving only 1 preferred name. 

http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

Above link to Check name Availability.

Above proforma to Check Trademark Availability.

Step 4 – Documents required to submit to ROC (Registrar of Company)

  • MOA (Memorandum of Association), It specifies the objective of the company and company should follow only the content which is mentioned in MOA
  • AOA (Articles of Association), This specifies the rules & regulation including Duties, Rights and power of the management of the company.

Step 5 – Appointment of Nominee

Member of the one person company must appoint Nominee on behalf of him/her, in case member is not able to perform his duty or died in such cases nominee can work on behalf of such person

To Appoint nominee one should give consent FORM INC-3 along with pan card and Aadhar card, along with NOC (Non-Objection Certificate) and consent on FORM INC-9 & FORM DIR-2.

In the end, it must get certified stating that it has complied with all law, rules and regulation.

Step 6 – Filing of Forms with MCA

  • All the documents must be filled with MCA (Ministry of Corporate Affairs) such as:
  • SPICe FORM, SPICe-MOA, SPICe-AOA and DSC approval.
  • And annual return filing of Annual Return (Section 92) and Financial Statement Section 134) must be filled annually.
  • Financial Statement must be filed within the period of 180 days from the closure of the Financial year.

Step 7 – Certification

  • Company Secretary in whole-time practise, Chartered accountant in whole-time practise or Cost Accountant in whole-time practice must certify the required documents it must get digitally signed by Professionals.
  • Or even by the Directors of the Company in the specified form.
  • All the documents should be uploaded in the following Link

http://www.mca.gov.in/

Next steps after uploading forms online is to pay ROC fees and Stamp duty.

Step 8 – Certificate of Incorporation

Certificate of incorporation will be emailed to directors of the company after scrutinizing the Documents and after getting approval from the ROC department.

Rule 3 Of Companies (Incorporation) Rules, 2014- One Person Company.

Only a natural person who is Indian citizen and resident in India is eligible to incorporate One Person Company and they can be a nominee of such Company. Minor cannot become a member of the one person company they will be considered as Disqualified from the eye of law. One person company must be converted into Private Limited Company If it crosses an annual turnover crosses 2 crores. One Person Company cannot be converted into Section 8 of companies act 2013, it cannot Non-banking Financing activities including Investment in Securities of any Body Corporate.

Benefits Of One Person Company

  1. Limited Liability in case of one person company as compared to other Companies. A proprietor’s personal assets can be attached to their business for recovery of losses, but as OPC is a separate entity, the shareholder’s liability is limited to his/her share value.
  2. Compliance in case of one person company is less as compared to other Companies
  3. Control mainly depends upon sole shareholder. As there is only one member in the case of one person company.
  4. It is less costly as compared to other companies in the case of Stamp duty, Form filling, Documentation costs.

Brief Procedure To Set Up An OPC:

(How to incorporate an OPC?)

For incorporating an OPC you need to login to Ministry of Corporate Affairs (MCA) website and file the following e-forms:

  • For the approval of the proposed company name – Form to be filed through RUN (Reserve      Unique Name) service available on the MCA website.
  • SPICE Form (Simplified Proforma for Incorporating Company Electronically)
  • Consent by the Nominee of the sole shareholder should be filed through form INC – 3. After filling all the above-stated forms and upon approval of the same by the ministry,  “Certificate of Incorporation” will be issued by MCA. Certificate of Incorporation is a  document which signifies that the OPC has been incorporated (Forms are available on        

http://www.mca.gov.in/MinistryV2/companyformsdownload

Nominee

A nominee is a person who shall become the shareholder of the OPC in case of death, disability of the original person to act as the sole shareholder of the OPC. The nominee should be an Indian citizen and should be residing in Indian.

A person cannot become the nominee or incorporate more than one in a one-person company. If a natural person is being the member of one person of Company in accordance with the laws and rule become the member of another company by virtue of being a nominee of such one-person company, but to avail such benefit they should comply with all the rules (2) within the period of 180 days.

If the nominee entitled to withdraw than notice of withdrawal shall be given within the period of 15 days. The nomination of new Personnel but be informed to the company through written consent in FORM INC-3, and in case of the new nominee with a registrar in FORM INC-4 to MCA.

Change of nominee should take place within 30 days from the date of intimation.

What Are The Restrictions On One Person Company?

  1. One Person Company cannot be incorporated or converted in -to Section 8 company.
  2. Minor cannot hold beneficial interest or become a member or Nominee of the company.
  3. One can become a member or director in only 1 one-person company not more than that.
  4. Prohibition for NBFC activities & Investments in Securities.

Penalty For Non-compliances

If a one-person company or an officer of such company is not complying with the rules and regulation or Contravenes it then they are punishable with a fine of 10000rs which may get increased up to 1000rs every day if they continue to do it.

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Sushma Gowda

Student, Vivekanand Education Society of Law Chembur Mumbai.

Sushma Gowda is a 1st year law student of Vivekananda education society of Law Chembur. She is an enthusiastic person to learn core area of various laws. She possesses research and drafting skills in different field of law. For any clarifications, suggestions and feedback kindly find her at sushmagowda1998@rediffmail.com

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