All About One Person Company (OPC) with FAQs

Article explains Section and Rules of Company Law Applicable to One Person Company (OPC), Forms Applicable to One Person Company (OPC), FAQs on One Person Company (OPC) and Points to be kept in mind while drafting MOA and AOA of OPC.

Section and Rules of Company Law Applicable to One Person Company (OPC)

Rule 3, 4, 5, 6, 7 of the Companies (Incorporation) Rules 2014 and Section 18 for conversion of OPC

Forms Applicable to One Person Company (OPC)

FAQs on One Person Company (OPC)

Q 1. Who can incorporate One Person Company? Or

Who can be member of OPC?

Ans Rule 3 of Companies (Incorporation) Rules 2014 provides that:

1. Only a natural person; (should not be minor)

2. Indian citizen;

3. Person Resident in India;

Q 2. Who can be nominee of OPC?

Ans  Rule 3 of Companies (Incorporation) Rules 2014 provides that:

1. Only a natural person; (should not be minor)

2. Indian citizen;

3. Person Resident in India

NOTE: A person can be member of one OPC only at a time but he can be nominee of other OPC. A person cannot act as member or nominee of more than one OPC at a time.

Q 3. What is the criterion to determine Person Resident in India?

Ans. Explanation 1 of Rule 3 of Companies (Incorporation) Rules 2014 specifically provides that “Person Resident in India” means a person who has stayed in India for a period of 182 Days in immediately preceding financial year.

Q 4.  Is it mandatory to appoint Nominee in case of OPC?

Ans. Yes, it is mandatory to nominate a person, (who shall meet the criteria as discussed above), at the time of incorporation, with his prior consent in the Form INC-3.

Nominee is a person who shall, in the event of Death of member or his incapacity to enter into contract, become the member of OPC.

Nominee may at anytime withdraw his consent, by giving notice to member and OPC as well.

Q 5. What are the various cases of change of nominee?

Ans. Following are the cases where new nominee require to be nominate

In case nominee withdraw his consent:

a) Nominee may at any time withdraw his/her consent, by giving notice to Member and Member shall within 15 Days from the Date of receipt of Notice of withdrawal of consent, nominate a new nominee, with his prior consent in Form INC 3 and give intimation to company about such nomination.

b) Company shall within 30 Days from the date of receipt of notice of withdrawal of consent, file with the Registrar, notice of withdrawal of consent in Form INC 4, along with consent of new nominee in Form INC 3.

2. If sole member change nominee on its own:

a) Sole member at any time by giving notice to company, change the name of person nominated by him (nominee) and nominate new nominee, with his prior consent in Form INC 3.

b) Company shall within 30 Days of receipt of notice of such change, file with the Registrar, notice of such change in Form INC 4, along with consent of new nominee in Form INC 3.

3. In case of death of member or his incapacity to enter into contract: 

a) Where sole member ceases to be member because of Death or his incapacity to enter into contract or for any other reason, his nominee become member of OPC and such new member shall, within 15 Days of becoming member, nominate a new nominee with his prior consent in Form INC 3, who shall in the event of his death or incapacity to enter into contract become member of such company.

b) Company shall within 30 Days of change in membership, file with the Registrar, notice of such cessation and nomination in Form INC 4, along with consent of new nominee in Form INC 3.

Q 6. Can OPC be incorporated as Public Limited Company?

Ans. No.

2(62) of the Companies Act 2013 defines “One Person Company”, means a company which has only one person as a member.

2(68) “private company” means a company having a minimum paid-up share capital as may be prescribed, and which by its articles,—

(i) restricts the right to transfer its shares;

(ii) except in case of One Person Company, limits the number of its members to two hundred:

(iii) prohibits any invitation to the public to subscribe for any securities of the company;

1. Thus OPC can be incorporated only as a Private Limited Company having one person as a member only.

2. No OPC can be incorporated as public company or as Section 8 Company (Company not for Profit).

3. OPC cannot be incorporated as Holding Company or Subsidiary Company (either wholly owned or partially owned subsidiary).

4. No OPC can be converted into Section 8 Company.

5. “One Person company” required to be mentioned in bracket below the name of company. Example – XYZ TRAVELS (OPC) PRIVATE LIMITED

Q 7. What are the restrictions in carrying on the activity of OPC?

Ans

• OPC cannot carry on NBFC related activities.
• OPC cannot acquire/invest in securities in its own name in other body corporate however member can invest in the shares of other body corporate.
• OPC cannot issue or allot shares to anyone except its member.

Q 8. What is the provision of conversion of OPC?

Ans. Two methods of conversion are there:

A) Voluntary Conversion

B) Mandatory Conversion

a) Voluntary Conversion: An OPC can voluntarily converts itself into Private or Public Company, provided 2 years must have elapsed since incorporation.

In simple words, An OPC, after completion of 2 Years from the Date of Incorporation, can convert itself into Private or Public Company.

An application in this regards to be made in Form INC-6, pursuant to Section 18 of Companies Act, 2013 and Rule 7 Companies (Incorporation) Rules 2014.

b) Mandatory Conversion:

i) If at any time after incorporation, Paid up Share Capital of company exceeds 50 L Rs. OR its average annual turnover of preceding 3 consecutive financial year exceeds 2 cr. Rs, it ceases to continue as OPC.

ii) Intimation of exceeding threshold limit required to be given to ROC in Form INC-5 within 60 Days from the day on which limit exceeds.

iii) Application for conversion of OPC into Private/Public Company to be made in Form INC-6, within 6 Months from the effective date on which the threshold limit exceeded.

Q 9. What are the various benefit/exemption provided to OPC?

Ans.

1. Cash Flow Statement is not required to be prepared as a part of their Financial Statement.

2. OPC can have only one Director at the Board. Board Resolution can be passed by entering it into minute book, which shall be signed and dated by Director and such date deemed to be meeting of Board of Director.

3. Provision of section 98 and section 100 to 111 (both inclusive) not apply to OPC.

4. Resolution, either Special Resolution or Ordinary Resolution, can be passed simply by member by communicating resolution to company and by entering it into minute book, which shall be signed and dated by sole member.

5. Financial statement of OPC is required to be signed by one Director only if there is one Director on the Board.

6. Abridged list of content for opc and small company. (MCA vide its notification dated 31, July 2018, has brought Companies (Accounts) Amendment Rules, 2018 and inserted Rule 8A to Companies (Accounts) Rules 2014 which contain the matters to be included in Board Report.)

Link of Notification ⇒ CLICK HERE

7. Unlike other companies, at least one Board Meeting required to conduct in each half calendar year, however the gap between two meeting should not be less than 90 Days (If there is two or more than two Director at the Board)

Q 10. What are the various documents/information required to incorporate an OPC?

Ans

1. Digital Signature of member;

2. Self attested PAN & Adhaar;

3. Proof of Identity of sole member – Voter ID/Driving License/Passport;

4. Proof of Address of sole member – Electricity Bill/Mobile Bill/Telephone Bill/Bank Statement; (any document should not be older than 2 months)

5. Proof of Identity of nominee

6. Proof of Address of nominee

7. Email ID and Phone No. of sole member;

8. Email ID and Phone No. of nominee;

9. Passport size photo;

10. Consent to act as Director in Form DIR-2;

11. Consent of Nominee in Form INC-3;

12. Rent Agreement of Registered Address; (if Rented/leased), ownership document (if owned)

13. NOC of owner if taken on rent/lease;

14. Utility Bill of Registered Address proof;

15. Proof of appointment of Authorized Signatory for GSTN; (mandatory for Agile Pro)

16. Proof of Identity of Authorized Signatory for opening Bank Account;

17. Proof of Address of Authorized Signatory for opening Bank Account;

Points to be kept in mind while drafting MOA and AOA of OPC

1. All documents should be self-certified.

2. Object entered in MOA should be in consonance with object entered in SPICe Part A.

3. An OPC cannot carry on NBFC activity remove these points from MOA.

4. An OPC cannot issue/allot securities to any person except its member, remove these points from AOA.

5. An OPC cannot invest or acquire in securities of any body-corporate, remove these points from MOA & AOA.

6. Definition of OPC as per Section 2(62) along with definition of Private Company as per 2(68) must be mentioned in AOA.