CS Akhilesh Kumar Jha
One Person Company is new concept under the Companies Act, 2013. Previously, there was no such type of concept. One Person Company means a company which has only one person as a member. That type of Company Called “One Person Company” (Section 2(62)). It means it is a gift of Companies Act, 2013 that any person, may incorporate company, who is competent to contract. Previously, under the Companies Act, 1956, such type of company could not be incorporated.
The status of the One Person Company shall be “Private Company”. Wherever the name of the company shall be mentioned, it should be noted that the word “One Person Company” must be written in the “()” below the name of the Company. The Memorandum of Association of One Person Company shall also indicate the name of other Person who shall be a nominee of Member. Therefore, In this regard a written consent shall be taken from such Nominee member. Such provisions have been mentioned in the Law due to only observing that, in case of original member shall be incapable due to any reason at any time or due to his death. The nominated Person shall become Member of the Company after the incident.
Further, it shall be duty of the Company to file such consent letter with Registrar of Companies at the time of formation of Company.
Nominated Person has right to withdraw his name. The Method for withdrawing shall be prescribed. The Member has also right to change the nominated person. The Nominated person may be changed, when the Member give notice. The method of notice shall be prescribed.
It shall also be a duty of the Member of the One Person Company to intimate to the company for any change in the name of Nominated Person. The Name of Nominated Person shall be mentioned in the Memorandum of Association of the Company. Thereafter, it shall be a duty of the Company to intimate to Registrar of Companies.
It should be noted that in case any change in the Name of the Nominated Person. It shall not be constructed that it is alteration in the Memorandum of Association of the Company (Section 3).
Important Provisions under the Companies Act, 2013
1- Cash Flow Statement is not included in the Definition of “Financial Statement”. It means Cash Flow statement is not mandatory for One Person Company .(Section 2 (40))
2- Annual Return shall be signed by the Company Secretary or where there is no company secretary, by the directors of the Company. (Section 92)
3- It is not compulsory to call Annual General Meeting. (Section 96)
4- It is not mandatory to call General Meeting in case of One Person Company, so any transaction which shall be moved in the General Meeting as per Section 114 of the Act, The One Person Company may communicate that resolution to members. Thereafter, As per Section 118 of the Act, that matter shall be entered in the Minutes Book which is maintained under law and signed and dated by the Member. Such date of Signing shall be deemed the date of Meeting. This date shall be referred all purpose under this Act. (Section 122)
5- Simultaneously, in the Board of One Person Company only one director, The Company may communicate resolution for any truncation or purpose. Thereafter as per section 118 of the Act, such resolution shall be recorded in the Minutes Book under the Law and signed and dated. Such date of Signing shall be deemed the date of Meeting. This date shall be referred all purpose under this Act. (Section 122)
6- Financial Statement, including consolidated financial statement, if any, shall be approved by one director and submitted to the Auditor for his report thereon. (Section 134)
7- The Board Report must be enclosed with the Financial Statement and it also signed by the One Director. The Board Report must be contained explanation and comments on every reservation, qualification and adverse remark of Auditor. (Section 134)
8- The Auditor Report also shall be attached with the Financial Statement (Section 134)
9- One Person Company shall file its Financial Statement along with necessary documents which is duly adopted by the Member within 180 days from the date of ending of financial year/ closure of financial year.
10- An individual who is member shall be deemed as first director until the director or directors are duly appointed by the members according to the Provisions of the Act. (Section 152)
11- One Person Company must conducted Board Meeting, the one meeting must be held in each half of a calendar year and gap between two meetings should not be less than 90 days. The section 174 is not applicable for Once Person Company. (Section 173)
12- It is duty of the company to note down the contract in the next board meeting immediately holding after the entering into contract, where the sole member is a member and a director of the company and those contracts which is ordinary course of business shall not be included here. (Section 193)
This may be new. But the minimum for Board Meeting should not be less than 90 days, is a anomaly. Because in case of giving Bank Guarantee etc. bank insists that company submit a Board Resolution. There may be frequent request for such issuance of B/G and Board has to meet (in one form or other meaning) and conduct the business in hand. Then how come not less than 90 days stands??? So also the General Meeting not called for by one section but again it is specific in another section. There are no simple worded Act. and each act confuses and get more amendments. Today if you know Ramaya’s Companies Act explanation comes in equal size of two volumes..similar to the one earlier large bound.
Yes DDT applicable & Income tax provision related to companies applicable
Section related to One person company is applicable or not?
In case of this type of company, whether income tax provisions related to companies or individual will apply?
Also, what will be the position of declaration and distribution of dividend? Whether DDT would be applicable?
what is procedure to set up this type of company?