New dimensions of the OPC were introduced in the Company Act 2013 by the Ministry of Corporate Affairs to provide the benefits of private company to Proprietorship firm and Individual entrepreneur.
OPC is also a private company as per section 3 (1) (C) of companies Act, 2013 but in companies Act, 2013 there some benefits / exemptions gives to OPC because OPC is a concept of Single member Company and its not possible for a single member to follow all the mandatory compliances of Private limited companies.
So keeping this in mind, OPC have been given some benefits and exemption in Companies Act, 2013.
Definition of OPC under Companies Act, 2013
Sec. 2 (62) “One Person Company” means a company which has only one person as a member;
Silent feature of OPC :-
- As per Rule-3 of Companies (incorporation) Rules, 2014 Only a natural person who is an Indian citizen and resident in India-
- shall be eligible to incorporate a One Person Company;
- shall be a nominee for the sole member of a One Person Company
Explanation – For the purposes of this rule, the term “resident in India” means a person who has stayed in India for a period of not less than 182 days during the immediately preceding financial year.
- A natural person shall not be member of more than a One OPC at any point of time and the said person shall not be a nominee of more than a One
- It is important to note that only natural persons can become members of OPCs.
- Minor cannot become member or nominee of the One Person Company or cannot hold share with beneficial interest.
- OPC Company cannot be incorporated or converted into a company under Section-8 of the Act, 2013.
- Minimum and maximum member in OPC is one.
- OPC have only 1 Director and it can have maximum 15 Director.
- OPC Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporates.
- OPC Company cannot convert voluntarily into any kind of company unless two years is expired from the date of incorporation of One Person Company, except threshold limit (paid up share capital) is increased beyond fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees.
- the memorandum of One Person Company shall indicate the name of the other person (nominee), with his prior written consent in the Form No. lNC-3, who shall, in the event of the subscriber’s death or his incapacity to contract become the member of the company.
- the written consent of nominee shall also be filed with the Registrar in the Form No. lNC-3 at the time of incorporation of the One Person Company along with its memorandum and articles.
- The person (nominee) nominated by the 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.
- The sole member shall nominate another person as nominee within fifteen 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 so nominated in Form No. INC.3.
- When company received the notice of withdrawal of consent from nominee The Company shall file Form No INC.4 within thirty days of receipt of the notice along with applicable fee and the written consent of such another person so nominated in Form No. INC.3.
- The subscriber or member of a One Person Company may, by intimation in writing to the company, change the name of the person nominated by him at any time for any reason including in case of death or incapacity to contract of nominee and nominate another person after obtaining the prior consent of such another person in Form No INC.3:
- Where the sole member of One Person Company ceases to be the member in the event of death or incapacity to contract and his nominee becomes the member of such One Person Company, such new member shall nominate within fifteen days of becoming member, a person who shall in the event of his death or his incapacity to contract become the member of such company, and the company shall file with the Registrar an intimation of such cessation and nomination in Form No INC.4 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 within thirty days of the change in membership and with the prior written consent of the person so nominated in Form No. INC.3.
Benefits /exemptions for OPC
- Board Meetings: – OPC doesn’t have a wide range of business so it’s not required for OPC to hold 4 board meetings in year, OPC may hold only 2 board meetings in a calendar year, i.e. one Board Meeting in each half of the calendar year with a minimum gap of ninety days between the two meetings.
- Annual Return: – Annual Return of an OPC can be signed by the company secretary alone, or where there is no company secretary, by a single director of the company.
- Cash Flow Statement: – An OPC needs not to include Cash Flow Statement as part of its financial statement.
- Exemptions for Audit Report: – OPC not require giving report on internal financial controls with reference to financial statements and the operating effectiveness of such controls in audit report.
- Exemptions for annual general meeting: – As per section 96(1) OPC is not required to hold an annual general meeting.
- Exemptions for Rotation of company auditors: –It is not necessary for OPC to follow the condition laid in Section 139(2) of the Company Act 2013, which mandates the rotation of auditors every 5 years (individual auditors) and every 10 years (firm of auditors).
- Exemptions from the provisions of holding general meeting: – The provisions of Section 98 and Sections 100 to 111 (both inclusive), relating to holding of general meetings, shall not apply to a One Person Company.
- Exemptions from applicability of Secretarial Standards: – If only one Director in the Board of OPC than SS-1 is not applicable on OPC. SS-2 is also not applicable on OPC.
- Exemptions for Board’s Report: – Matters to be included in Board’s Report mention in Rule -8 of companies (Accounts) Rules, 2014 not apply for OPC.
- Exemptions for Signing of Financial statements: –In the case of One Person Company, only one Director can signed financial statements for submission to the auditor for his report thereon.
- Exemptions from applicability of Companies (Auditor’s Report) Order, 2016: – Companies (Auditor’s Report) Order, 2016 not applicable on OPC.
- Lesser penalties for OPC under Section 446B of the Companies Act, 2013: – If an OPC fails to comply with the provisions of section 92(5), section 117(2) or section 137(3), such company and officer in default of such company shall be liable to a penalty which shall not be more than one half of the penalty specified in such sections.
(Author Name – CS Jitendra Sharma, JITENDRA S & ASSOCIATES Company Secretary in Practice from Kota (Rajasthan) and you can contact at [email protected] )