Sumit Kumar Swarnakar
An Entrepreneur is an individual who chooses to go into business by himself. Often entrepreneur decide to stay a One Person to keep decisions and quality of work under control. The global changes given a chance to an individual to participate into economic activity and these activities may take place through the creation of an economic person by the company law.
With increasing use of information technology and computers, emergence of the service sector, it is the time that the entrepreneurial capabilities of the people are given an outlet for participation in economic activity; such economic activity may take place through the creation of an economic person in the form of a Company.
On 2nd December 2004, the Government of India constituted an Expert Committee on Company Law under the Chairmanship of Dr. J.J Irani to make recommendations on various Company Law issues.
The Irani expert committee recommended the formation of “One Person Company” (OPC) for the very first time in the Indian History in the year 2005. The committee has suggested that such an entity may be provided with the simpler legal regime through exemptions so that the single entrepreneur is not compelled to fritter away time, energy, and resources on procedural matters.
The concept of One Person Company (OPC) is a new form of business introduced by the Companies Act 2013 thereby enabling Entrepreneur(s) carrying on the business in the sole proprietor form of business to enter into a corporate framework.
In simple words we may say that One Person Company is a hybrid of Sole proprietor and Company form of business, and has been provided with concessional / relaxed requirements under the Act.
As the name suggests, a One Person Company is a form of private company with separate legal entity which is formed with only one person as its member. Since such companies have only one member, these companies enjoy certain privileges or exemptions as compared to other companies.
As per Section 2(62) of the Companies Act 2013,” One Person Company means a company which has only one person as a member.”
Salient Features of One Person Company (OPC)
- A One Person Company can be incorporated as a private limited company only.
- It has only One Person as a member / share holder.
- It must have a minimum of one director, the sole shareholder can himself be the sole Director. The company may have a maximum of Fifteen Directors.
- If the Articles of Association do not contain the name of the first director, member of the One Person Company will be deemed to be the first director till the time director(s) is duly appointed.
- The minimum paid up share capital is ` 1 Lakh.
- The word “One Person Company “must be mention in brackets below the name of the company to distinguish it from other forms of companies.
- It need not to hold any Annual General Meeting (AGM) in every year.
- The provision regarding calling of an extra ordinary general meeting by the board or tribunal do not apply to One Person Company.
- All provisions regarding Annual General Meetings like notice period, contents of notice, explanatory statement, quorum requirements, proxies, voting etc. do not apply to One Person Company.
- The Memorandum of One Person Company shall indicate the name of the other person/nominee, who shall, in the event of the subscribers’ death or his incapability to contract become the member of the company, till the date of transmission of shares to legal heirs.
- The written consent shall be filed with the Registrar at the time of Incorporation of the One Person Company along with its Memorandum of Association & Articles of Association.
- The nominee/other person can withdraw his consent at any time.
- The nominee may be change at any time, by notice to the other person & intimate the same to the company. Then the company should intimate the same to the Registrar.
- The Financial Statements of a One Person Company consist of The Profit & Loss Account, Balance Sheet, Notes to Account. The Cash Flow Statement may not include in the Financial Statements.
- Only one director is sufficient to sign the Financial Statements / Directors’ Report.
- One Person Company should file the copy of the financial statements with Registrar with in a period of 180 days from the closure of Financial Year.
- The Annual return of a One Person Company shall be signed by the Company Secretary, or where there is no Company Secretary, by the director of the company.
- It should inform to the Registrar about every contract entered and also should record in the minutes of the meeting within 15 days from the date of approval by the Board of Directors.
- A person shall not be eligible to incorporate more than One Person Company or become nominee in more than one such company.
- A minor cannot become a member or nominee of the One Person Company or can hold share with beneficial interest.
- One Person Company cannot carry out NON Banking Financial Investment activities including investment in securities of anybody corporate.
- All the businesses to be transacted at the meeting of the Board shall be entered into minutes book maintained under section 118.
- One Person Company cannot voluntarily converted into any kind of company unless two years have been expired from the date of incorporation except in case its paid up share capital exceeds ` 50 Lakhs or its average turnover during the relevant period exceeds ` 2 Crores.
Procedure for the formation of One Person Company
- Obtain Digital Signature Certificate (DSC) for the proposed director(s).
- Obtain Director Identification Number (DIN) for the proposed director(s).
- Select suitable company name and make application in FORM INC-1 to the Ministry of Corporate Office for availability of name.
- After approval of name, FORM INC-2 shall be filed for incorporation of One Person Company within 60 days of filing FORM INC-1.
- Draft Memorandum of Association and Articles of Association.
- Sign and file various documents including Memorandum of Association and Articles of Association with the Registrar of Companies electronically.
- Payment of requisite fee to Ministry of Corporate Affairs and also stamp duty.
- Scrutiny of documents by the Registrar of Companies.
- Receipt of Certificate of Registration or Incorporation from the Registrar of Companies.
- Enjoy the status of One Person Company.
The required data and information to prepare this assignment report have been collected from secondary sources:
1. The Companies Act 2013 issued by The Gazette of India.
2. Internet Websites