One Person Company Formation and Provisions

One Person Company [Section 2(62)] – “One Person Company” means a company which has only one person as a member.

Section 3 of Companies Act, 2013 and Rules 1-7 of Companies (Incorporation) Rules, 2014 dealing formation of this type of company.

Formation of One Person Company –

• One Person Company is also an another form of Private Company. It shall be formed by one person by subscribing their name in MOA of Company.
• Only a Natural Person who is a citizen of India (Resident or otherwise) and having capacity to make contract shall be eligible to incorporate a one person company.
• This type of Company can be converted into any kind of company on voluntarily basis after expiry of two years.

However it shall be mandatorily converted into any other form in the following cases –

1. It has increased it’s Paid up Capital beyond 50 lakhs. Or

2. Its average annual turnover during the immediately preceding three consecutive financial years exceeds two crore rupees.

• It can’t be Converted into Section 8 Company. Further, It cannot carry on NBFC related activities.
• In addition to member subscription in MOA, the MOA shall also contains the name of one other Natural person (Nominee) who shall become the member of company with in 180 days of two events –

1. On the death of Member; or

2. If the member losing his capacity to make a contract.

Note – Such Nominated Person shall become nominee only of one OPC at a time.

• Nominee shall give his prior written consent to company in the form of INC – 3 and it shall be filed by company to ROC at the time of Incorporation of Company with INC – 32 (Spice) form.
• Where a natural person, being member in One Person Company becomes a member in another Company by virtue of his being a nominee in that One Person Company, such person shall become member only in one such company and he shall have to decide membership in only one such company within a period of one hundred and eighty days.
• Such company may be either –

1. Company Limited by Shares; or

2. Company Limited by Guarantee; or

3. An Unlimited Company

Provisions related to Nominee –

1. Withdrawal of Consent by Nominee –

1. 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.

2. 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.

3. The company shall within thirty days of receipt of the notice of withdrawal of consent under sub-rule (3) 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 in Form No INC.4along with fee as provided in the Companies (Registration offices and Fees) Rules, 2014 and the written consent of such another person so nominated in Form No.INC.3.

2. Change in the Nominee –

1. 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

2. in case of death or incapacity to contract of nominee

3. or any other reason

and nominate another person after obtaining the prior consent of such another person in Form No INC.3:

• The company shall, on the receipt of such intimation, file with the Registrar,
• a notice of such change in Form No INC.4along with fee as provided in the Companies (Registration offices and fees) Rules, 2014 and
• The written consent of the new nominee in Form No.INC.3within thirty days of receipt of intimation of the change.

3. Change of Member in Case of Death or Incapacity to contract of Sole member –

1. The Nominee shall become member of Company  in case of Death or Incapacity to contract of Sole member.

2. 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

3. The company shall file with the Registrar

4. an intimation of such cessation and nomination in Form No INC.4along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 within thirty days of the change in membership and

5. The prior written consent of the person so nominated in Form No.INC.3.

Note – any such change in the name of the person shall not be deemed to be an alteration of the memorandum.