Introduction:
One Person Company (OPC) is a unique corporate structure in India designed to facilitate entrepreneurship with limited liability. It allows a single individual to form and manage a company, combining the benefits of a sole proprietorship and a private limited company. Understanding the rules and regulations governing OPCs is crucial for individuals considering this business structure.
In this comprehensive guide, we will explore the formation of OPC, key rules and sections from the Companies Act, 2013, related to OPCs, and weigh the advantages and disadvantages of choosing this corporate entity.
1. What is OPC?
It means a company which has only one person as a member : Section 2(62).
Words “One Person Company” must be mentioned below the name of the Company.
2. Formation of OPC.
|
Sr No. |
Content | Form | Section/ Rule |
| 1. | Who can be member/ Nominee? | – Only Natural Person
– Resident/ Non Resident |
Rule 3 |
| 2. | Can a member be a member or Nominee in more than 1 OPC? | No | Rule 3
The Companies (Incorporation) Rules, 2014 |
| 3. | Subscription of member and Indication of nominee in MOA | – Person shall subscribe his name to MOA
– Indicate the name of Nominee with his prior Consent in MOA – Prior Consent in INC-3 – Prior Consent – file with ROC at the time of incorporation with MOA & AOA. |
Section 3
and Rule 4 The Companies (Incorporation) Rules, 2014 |
| 4 | Can the Member and Director be the same person ? | Yes | 152(1) |
| 5 | ROC Filing | Nomination details + INC 3, shall be filed in INC-32 (SPICe+) as a declaration. | Rule 4
The Companies (Incorporation) Rules, 2014 |
| 6 | Withdrawal of consent of nominee. | Nominee – by giving written notice – can withdraw the consent | Section 3
and Rule 4 The Companies (Incorporation) Rules, 2014 |
| 7 | Filing of withdrawal of consent. | INC-4 : Within 30 days of receipt of notice of withdrawal
+ Written consent of another nominee. |
Rule 4
The Companies (Incorporation) Rules, 2014 |
| 8 | Can OPC be converted into Section-8 Company? | No | Rule 3
The Companies (Incorporation) Rules, 2014 |
3. Advantages/ Disadvantages of OPC.
|
Advantages |
Disadvantages |
| No Need of any Minimum Share Capital | |
| No Need to hold AGM
Enter Resolution in Minute Book. |
Limited Funding |
| MGT-7A : Within 60 days of entry of Ordinary Resolution in Minute Book
Signing – CS or One Director
|
Nominee Requirement |
| AOC-4 : 180 days from the closure of FY | OPC can’t carry out Non – Banking Financial Investment activities including investment in securities of anybody corporate. |
| Financial Statement : Shall be signed by 1 director | OPC can’t be converted into Section-8 Company. |
| Director’s Report : Signed by 1 Director | A person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company. |
| Board meeting : 1 Board Meeting in each half of a calendar year.
Gap between 2 Board Meeting = not less than 90 days. |
– |
| Notice of Board Meeting : 7 days notice | – |
| If OPC is having 1 Director : SS-1 NA | – |
| SS-2 NA | – |
| No need to prepare Cash Flow Statement | – |
| Exemption from rotation of Company Auditors and filing Audit Report | – |
| The provisions of section 98 and sections 100 to 111 (both inclusive) shall not apply to a One Person Company. | – |
| Lesser penalties for OPC under Section 446B of the Companies Act, 2013 | – |
4. Key Sections of Companies Act for Meeting Regulations:
These sections from the Companies Act, 2013, are essential for understanding the procedures and regulations related to meetings and voting in companies, including OPCs (One Person Companies).
Section-98: Power of Tribunal to Call Meetings of Members, etc.
- This section empowers the Tribunal to call meetings of members, creditors, or any class of them, for various reasons, including settling disputes or conducting necessary business.
Section-99: Punishment
- This section outlines punishments for non-compliance with meeting-related regulations, emphasizing the importance of adherence to statutory requirements.
Section-100: Calling of Extraordinary General Meeting
- It specifies the circumstances under which an Extraordinary General Meeting (EGM) can be called, providing flexibility for companies to address urgent matters.
Section-101: Notice of Meeting
- This section details the requirements for providing notice of meetings, ensuring that stakeholders are informed about upcoming gatherings and their agendas.
Section-102: Statement to be Annexed to Notice
- It mandates that certain statements and documents be attached to the notice of the meeting, ensuring transparency and proper disclosure of information.
Section-103: Quorum of Meeting
- Quorum refers to the minimum number of members required to conduct a valid meeting. This section defines the quorum for different types of meetings.
Section-104: Chairman of Meetings
- It addresses the appointment of a chairman for meetings and specifies their role and responsibilities in maintaining order during the proceedings.
Section-105: Proxies
- This section allows members to appoint proxies to represent them at meetings, enabling participation even in their absence.
Section-106: Restriction on Voting Rights
- It outlines restrictions on voting rights, ensuring that voting is fair and in accordance with legal requirements.
Section-107: Voting by Show of Hands
- This section explains the procedure for conducting votes by a show of hands, a common method in meetings to determine the preference of members.
Section-108: Voting through Electronic Means
- It addresses the use of electronic methods for voting, reflecting modern practices and technology in corporate governance.
Section-109: Demand for Poll
- A poll is a formal vote, and this section provides guidelines for members to demand a poll when they believe it is necessary.
Section-110: Postal Ballot
- This section deals with the procedure for conducting voting through a postal ballot, allowing members to cast their votes by mail.
Section-111: Circulation of Members’ Resolution
- It specifies the requirements for circulating members’ resolutions, ensuring that important decisions are communicated and voted upon as needed.
These sections collectively govern the conduct of meetings, voting processes, and compliance with statutory requirements in companies, including OPCs, promoting transparency and accountability in corporate affairs.
Understanding the rules and advantages/disadvantages of OPC is essential for individuals interested in forming such companies in India. It’s crucial to comply with regulations and make informed decisions regarding OPC formation.
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