One Person Company (OPC)admin2019-05-07T08:01:51+00:00
One Person Company
The revolutionary new concept of ‘One Person Company’ (OPC) has been introduced by the Companies Act, 2013. This concept of OPC was first recommended by the expert committee of Dr. JJ Irani in 2005. OPC provides a whole new bracket of opportunities for those who look forward to start their own ventures with a structure of organized business. OPC will give the young businessman all benefits of a private limited company which categorically means they will have access to credits, bank loans, limited liability, legal protection for business, access to market etc all in the name of a separate legal entity.
Though the concept of OPC is new in India but it is a very successful form of business in UK and several European countries since a very long time now.
The concept with special features
One Person Company is defined in Sub- Section 62 of Section 2 of The Companies Act, 2013, which reads as follows: ‘One Person Company means a company which has only one member’
It shall also be important to note that Section 3 classifies OPC as a Private Company for all the legal purposes with only one member. All the provisions related to the private company are applicable to an OPC, unless otherwise expressly excluded.
The only exception provided by the Act to an OPC is that according to the rules only “NATURALLY-BORN” Indian who is also a resident of India is eligible to incorporate an OPC. Meaning thereby, the advantages of an OPC can only be obtained by those INDIANs who are naturally born and also a resident of India. At the same, it shall also be worth mentioning that a person cannot form more than 5 OPC’s.
OPC and its Formation
An OPC is incorporated as a private limited company, where there is only one member and prohibition in regard to invitation to the public for subscription of the securities of the company.
The Salient features of an OPC include the following:
An OPC can be formed under any of below categories :
Company limited by guarantee.
Company limited by shares
An OPC limited by shares shall comply with following requirements :
Shall have minimum [paid up capital of INR 1 Lac
Restricts the right to transfer its shares
Prohibits any invitations to public to subscribe for the securities of the company.
An OPC is required to give a legal identity by specifying a name under which the activities of the business could be carried on. The words 'One Person Company' should be mentioned below the name of the company, wherever the name is affixed, used or engraved.
The member of an OPC has to nominate a nominee with the nominees written consent, and file it with the Registrar of Companies (RoC). This nominee in the event of death or in event of any other incapacity, shall become a member of an OPC. The member of an OPC at any time can change the name of the nominee providing a notice to the RoC in such manner as prescribed. On account of Death of a member, the nominee is automatically entitled for all shares and liabilities of OPC.
Exemptions available to one person company – legal provisions.
An OPC has certain privileges and exemptions which are not available to private companies. Such exemptions are enlisted for your ready reference:
Signatures on Annual Returns – Section 92 of the Companies Act,2013 It is provided in section 92 of The Companies Act, 2013, that the annual returns in the case of One Person Company shall be signed by the company secretary or where there is no company secretary, then by the director of the company.
Holding Annual General Meetings – Section 122 of the Companies Act,2013 Section 122(1) of The Companies Act,2013, provides that the provisions of S.98, S.100 to S.111(both inclusive) are not applicable to One Person Company. Therefore, provisions relating to General Meetings, Extra Ordinary General Meeting and Notice Convening to General Meeting are not applicable to One Person Company. However, for fulfilling the purposes of S.114 of the Companies Act,2013, where any business is required to be transacted at an Annual General Meeting, or other General Meeting of the company by means of an ordinary or special resolution, it shall be sufficient if the resolution is communicated by the member of the company and entered in the minutes book which is required to be maintained U/s 118 and signed and dated by the member and such date shall be deemed to be the date of meeting under the purposes of Companies Act,2013.
Board Meetings and Directors – Section149, 152 & 173 of the Act One Person Company needs to have one director. It can have maximum of 15 directors which can also be increased by passing a special resolution as in case of any other company. For the purposes of holding board meetings, in case of a OPC which has only One director, it shall be sufficient compliance if all resolutions required to be passed by such a company at a board meeting are entered in a minute book – signed and dated by the member and such date shall be deemed to have the date of the board meeting for all the purposes under Companies Act, 2013.
Signatures on Financial Statements - Section 134 and 137 of the Act. The OPC shall file with the RoC a copy of financial statements duly adopted by its members along with all the documents which are required to be attached to such financial statement, within 180 days from the closure of the financial year along with cash flow statements. The financial statement shall be signed by only one director and the annual return shall be signed by the company secretary and the director, and in case if there is no company secretary then only by the director.
Contracts by One Person Company – Section 193 of the Act. The new Companies Act, 2013 gives special attention to the contracts which will be entered by One Person Company.
If the company fails to comply with the provisions as to providing the information to the RoC then it shall be liable for punishment of fine which will be not less than twenty thousand rupees and extend to one lakh rupees and the imprisonment for a term which may extend upto 6 months.
Where a natural person, being member in One Person Company becomes a member in another OPC by virtue of his being a nominee in that OPC, then such person shall meet the eligibility criteria of being a member in only one OPC within a period of one hundred and eighty days, i.e., he/she shall withdraw his membership from either of the OPCs within one hundred and eighty days.
The average time taken to complete a one person company registration is about 10 – 15 working days, subject to government processing time and client document submission. Get a free consultation for one person company registration and business setup in India by scheduling an appointment.