“If you change the way you look at things, the things you look at change. -Wayne Dyer”
Introduction
The revolutionary new concept of 'One Person Company' (OPC) has been introduced by the Companies Act, 2013. One Person company (OPC)' has been introduced for the first time in India, which would allow a firm to be registered with just one shareholder and limited regulatory costs and other requirement.
One Person Company - Definition
As per the provision of Section 2 (62) of the Companies Act, 2013 defined (62) “One Person Company” means a company which has only one person as a member;
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• Single entrepreneur can manage his business on his own. So, the key difference between OPC and sole proprietorship is the way liabilities are treated. For instance, in an OPC the promoter’s liability is limited in the event of a default or legal issues. On the other hand, in sole proprietorships, the liability has not been restricted and
• Decision: One person can take a decision without waiting for other director’s consent and can be avoided wasting time and energy convincing other directors.
Who can incorporate a one person company?
Only a natural person who is an Indian citizen and resident in India shall be eligible to incorporate a One Person Company and shall be a nominee for the sole member of a One Person Company.
"RESIDENT IN INDIA" means a person who has stayed in India for a period of not less than 182 days during the immediately preceding 1 calendar year.
Whether a person shall form more than 1 one person company?
No, a person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company
Whether a minor become a member of OPC?
A minor shall not be eligible to become a member or nominee of the One Person Company or can hold share with beneficial interest.
Whether an OPC can carry out NBFC activities?
OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of anybody corporates.
Is OPC suitable for medium & large business?
No. OPC is suitable only for small business. OPC can have maximum Paid up share capital of Rs.50 Lakhs or Turnover of Rs.2 Crores. Otherwise OPC need to be converted into Private Ltd Company.
Is there any maximum time limit for conversion of OPC ?
Yes. One person Company cannot be converted voluntarily into any kind of company unless two years is expired from the date of incorporation, except threshold limit (paid up share capital) is increased beyond 50 lakh rupees or its average annual turnover during the relevant period exceeds 2 crore rupees.
Is it mandatory to nominate a person during incorporation ?
The subscriber to the memorandum of a One Person Company shall nominate a person, after obtaining prior written consent of such person, who shall, in the event of the subscriber’s death or his incapacity to contract, become the member of that One Person Company.
Whether it is mandatory to mention the name of the nominee in MOA?
Yes. The name of the person nominated shall be mentioned in the memorandum of One Person Company
Is it mandatory to mention the word OPC in all the documents?
The word OPC shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved.
Is it mandatory to intimate withdrawal of consent by nominee to the Company?
The person nominated by the subscriber or member of a One Person Company may, withdraw his consent by giving a notice in writing to such sole member and to the One Person Company.
How many days time period for nominating another person as nominee?
The sole member shall nominate another person as nominee within 15 days of the receipt of the notice of withdrawal and shall send an intimation of such nomination in writing to the Company, along with the written consent of such other person.
What is the maximum time period for intimation to Registrar about withdrawal and appointment of nominee?
The company shall within 30 days of receipt of the notice of withdrawal of consent has to file with the Registrar, a notice of such withdrawal of consent and the intimation of the name of another person nominated by the sole member and the written consent of such another person.
What is the procedure for issue of Share Certificate?
Every share certificate shall be issued under the seal of the company, which shall be affixed in the presence of and signed by one director or a person authorized by the Board of Directors of the company for the purpose and the Company Secretary, or any other person authorized by the Board for the purpose.
In case of event of death of member, who will be the member of OPC ?
Where the sole member of OPC ceases to be the member in the event of death or incapacity to contract and his nominee becomes the member of OPC, such new member shall nominate within 15 days of becoming member. The company shall file with the Registrar an intimation of such cessation and nomination within 30 days of the change in membership and with the prior written consent of the nominee
What is the maximum Penalty for defaulting the provisions?
If OPC or any officer of such company contravenes the provisions of Companies (Incorporation) Rules 2014, they shall be punishable with fine which may extend to 10,000 rupees and with a further fine which may extend to 1,000 rupees for every day after the first during which such contravention continues. "One person company (concept) is quite revolutionary... This will give the individual entrepreneurs all the benefits of a company “ Hon’ble Minister of Corporate Affairs- Sri. Sachin Pilot
When will be OPC to convert itself into a public company or a private company?
Where the paid up share capital of an OPC exceeds 50 lakh rupees or its average annual turnover during the relevant period exceeds 2 crore rupees, it shall cease to be entitled to continue as a OPC.
Is there any time limit for conversion of such OPC ?
Such One Person Company falling under above mentioned criteria shall be required to convert itself, within 6 months of the date on which its paid up share capital is increased beyond 50 lakh rupees or the last day of the relevant period during which its average annual turnover exceeds 2 crore rupees as the case may be, into either a private company with minimum of two members and two directors or a public company with at least of seven members and three directors in accordance with the provisions of section 18 of the Act.
Is it mandatory to alter Memorandum and Articles for giving effect to Conversion?
Yes. It is mandatory to alter its memorandum and articles by passing a resolution and to give effect to the conversion and to make necessary changes incidental thereto.
Whether prior intimation to Registrar is required for ceasing the status of OPC?
Yes. The OPC shall within period of 60 days from the date of applicability of sub-rule (1), give a notice to the Registrar and informing that it has ceased to be a OPC and that it is now required to convert itself into a private company or a public company by virtue of its paid up share capital or average annual turnover.
Is it mandatory to get signature from PCS in Annual Return for OPC ( Section 92)
The Annual return shall be signed by the Company Secretary or where there is no company secretary, by the Director of the Company.
Is it mandatory to comply the provisions of General Meetings ?
The provisions relating to Board Meeting, Annual General Meeting, Extra Ordinary General Meeting and Notice Convening General Meeting are not applicable to One Person Company.
Is it mandatory to maintain Minutes book for OPC?
Yes. The resolution by such director is entered in the minutes book required to be maintained under Section 118 and signed and dated by such director and such date shall be deemed to be the date of the meeting of the Board of Directors.
Is it mandatory to file financial statements ?
Yes. The Company shall file a copy of the financial statements duly adopted by its members along with all the documents which are required to be attached to such financial statements, within 180 days from the closure of the financial year.
Is it mandatory to record in Minutes about every contract ?
Where OPC limited by shares or by guarantee enters into a contract with the sole member of the company who is also the director of the company, the company shall, unless the contract is in writing, ensure that the terms of the contract or offer are contained in a memorandum or are recorded in the minutes of the first meeting of the Board of Directors of the company held next after entering into contract.
It is not mandatory for the contracts entered into by the company in the ordinary course of its business.
Is it mandatory to inform Registrar about every contract ?
The company shall inform the Registrar about every contract entered into by the company and recorded in the minutes of the meeting of its Board of Directors within a period of 15 days of the date of approval by the Board of Directors.
Is it mandatory to prepare Cash Flow Statement?
No. Cash Flow Statement is not mandatory for OPC Companies
PROCEDURES FOR CONVERSION OF PRIVATE COMPANY INTO OPC
Conversion of Private Company into One Person Company.
1) A private company other than a company registered under section 8 of the Act having paid up share capital of 50 lakhs rupees or less or average annual turnover during the relevant period is 2 crore rupees or less may convert itself into one person company by passing a special resolution in the general meeting.
2) No objection in writing from members and creditors is required before passing resolution
3) A Copy of special resolution has to be filed with Registrar within 30 days..
4) The company shall file an application to the Registrar along with the following documents:
i. The directors of the company shall give a declaration by way of affidavit duly sworn in confirming that all members and creditors of the company have given their consent for conversion, the paid up share capital company is 50 lakh rupees or less or average annual turnover is less than 2 crore rupees, as the case may be;
ii. The list of members and list of creditors;
iii. The latest Audited Balance Sheet and the Profit and Loss Account; and
iv. The copy of No Objection letter of secured creditors.
DUE DATE OF FILING FORMS FOR OPC
CHECK LIST FOR INCORPORATION OF OPC:
NAME AVAILABILITY :
1. Information required for DIN:
1. DIN No. if available
2. Permanent residential address of the applicant
• Passport
• Voter id card
• Driving License
• Aadhaar Card
• Or any other valid address proof
3. Educational Qualification of the applicant
4. Identity proof
Other information to be provided
1. The applicant should provide the following details:
• Proposed name - Max of 6 names can be quoted – name will be considered on the basis of name subscribed ( first to last basis).
• Proposed business to be carried on
• Capital to be contributed for the formation.
• State in which the registered office of the LLP to be situated
• Details of nominee
2. After obtaining name availability, within 60 days we have to file incorporation documents with ROC. The following are the attachments
• Memorandum of Association of the Company
• Articles of Association of the Company
• Proof of identity of the member and the nominee
• Residential proof of the member and the nominee
• Consent of Nominee in form INC.3
• Affidavit from the subscriber and first Director to the memorandum in Form No. INC.9
• Specimen Signature in Form INC.10
• List of all the companies (specifying their CIN) having the same registered office address, if any; Specimen Signature in Form INC.10
• Consent from Director
• Proof of Registered Office address
• Copy of PAN card of member and nominee
• Details of duration of stay at present address if it is less than one year address of the previous residence has to be provide
• Details of name of the nominee.
• Details of entrenchment of articles
CONCLUSION:
OPC Company is like an One Man Army. The Compliance burden is very less and the liability of the members is very limited is an added advantage. OPC is expected to benefit people who are into self employment and many small scale sectors. It is a remarkable feature of the Companies Act, 2013. “OPC would boost the confidence of small entrepreneurs”
BY
CS.P.Eswaramoorthy, B.Sc., FCS.,
Company Secretary in Practice
Director – Viesva Corpserv Private Ltd, 60A, School
Road, Krishnsamy Nagar, Ramanathapuram,
Coimbatore - 641045
E.Mail: eswarfcs@gmail.com
&
Ms S.Vidhya. B.Com., ACS, Company Secretary
Mr M S Sivakumar, Manager –Compliance
Ms V.Priyadharsini, Manager –Compliance
Mr K Karthik, Officer-Accounts
Mr Sanjay, Trainee
Mr S Ramkumar, Trainee
Disclaimer:
This Article has been prepared on the basis of Companies Act,2013, Rules, Notifications and personal observations. The users and readers are advised to cross check with the original Act & Rules before acting upon this document.
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