CS Dhruval Baldha
Introduction: The Companies Act, 2013 has introduced new concept of ‘One Person Company’ (herein after referred to as ‘OPC’). Section 3 (1) (c) has been notified vide notification dated 26th March, 2014 and the same shall be effective from 01st April, 2014.
It is a new form of business by which company can be incorporated with one person only. It enables the entrepreneur carrying the business in the Sole-Proprietor form of business to enter into a Corporate Framework. One Person Company is a hybrid of Sole-Proprietor and Company form of business, and has been provided with relaxed requirements under the Companies Act, 2013.
Governing Act and Rules:
According to section 2 (62) of the companies Act, 2013, ‘One Person Company (OPC)’ means a company which has only one person as a member.
Further, An OPC is owned and can be managed by one person as the sole member and director.
Member of OPC:
Nominee of OPC:
The subscriber to the memorandum of OPC 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 OPC (Rule 4 (1)).
Explanation – the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty two (182) days during the immediately preceding one calendar year.
Directors of OPC:
Paid up share capital:
Minimum paid up capital of Rs. 1,00,000/- (Rupees One Lakh).
Board of directors meeting:
The OPC is required to hold minimum two Board meeting during a calendar year and one meeting in each half of the calendar year and gap between two meetings is not more than 90 days [Section (173)(5)].
Annual general meeting:
The provision of holding of Annual General Meeting is not applicable to OPC.
Financial Statement of OPC:
The Financial statement of OPC includes balance sheet, profit and loss account and statement of changes in equity.
Financial statement may not include the cash flow statement.
The OPC is required to file the copy of financial statement within 180 days from the closure of the financial year [Section 137(1)].
Withdrawal of consent by nominee:
The sole member shall nominate another person as nominee within fifteen (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 in Form No INC 3 [Rule 4 (3)].
Change the name of nominee:
Appointment of new nominee the case of change in membership:
Exemptions available to OPCs under the Companies Act, 2013:
Following Sections are not applicable to OPCs:
Exception – If paid up share capital exceeds Rs. 50,00,000/- (Rupees Fifty Lakhs) or its average annual turnover during the relevant period exceeds Rs. 2,00,00,000/- (Rupees Two Crores) or if during financial year its balance sheet total exceeds one crore rupees, it would cease to be continue as an OPC. However, such OPC would be mandatorily required to convert itself within a period of six months into a Private or Public Company.
The advantage of an OPC is that a single person can start a business and he can independently carry out business under the company structure. OPC provides greater flexibility to an individual to manage his business efficiently and enjoy its benefits. This is a concept that is expected to give big push to Corporatization in the country.