CA HARIKRISHNAN.R

CA HARIKRISHNAN.RA One Person Company is a Company is a new concept in India ushered in by the Companies Act, 2013 and is similar to ‘Single Member Company’ defined under section 123 of the British Companies Act, 2006.

Section 2(62) of The Indian Companies Act 2013 defines a “One Person Company” means a company which has only one person as a member;

So it follows that a one person company shall have only one person as its member.

The Memorandum of Association of a one ‘One Person Company’ is to be drafted in the common format applicable to other types of companies and in the case of a Company Limited by Shares it has to be in the format under Table A of Schedule I and signed as follows

I, whose name and address is given below, am desirous of forming a company in pursuance of this memorandum of association and agree to take all the shares in the capital of the company”

This implies that there shall be one member only and he shall agree to take all the shares.

Till now, the concept is very clear. Now move on to the provisions relating to the incorporation of Companies.

Section 3(1) of the Companies Act, 2013 is as follows;

“A company may be formed for any lawful purpose by—

(a) seven or more persons, where the company to be formed is to be a public company;

(b) two or more persons, where the company to be formed is to be a private company; or

(c) one person, where the company to be formed is to be One Person Company

that is to say, a private company, by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration”

This seems to mean that as per clause (c), OPC can be formed by one person and it is a private company .

But what does the words ‘by subscribing their names’ signify.

Of course there is a requirement to name a nominee to become member in the OPC in the event of death or incapacitation of the person who is the member of the OPC.

In the memorandum the details of the nominee has to be given in the following manner;

“Shri/Smt………………, son/daughter of ………………….., resident of………… aged………… years shall be the nominee in the event of death of the sole member (Applicable in case of one person company)”

But he is only a nominee to the position of the member who would become the sole member in the event of death of incapacitation of the member.

Clause (c) of section 3 reads that OPC can be formed for any lawful purpose by subscribing their names or his name to a memorandum….

Now the moot point is “ Can OPC Have more than one member?

(Author is a CA from Kottayam (Kerala) and can be reached at hknair999@gmail.com)

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Category : Company Law (4005)
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Tags : CA HARIKRISHNAN.R (3) Companies Act (2469) Companies Act 2013 (2242) OPC (39)

0 responses to “Can One Person Company (OPC) Have more than one member?”

  1. Prakhar Kothari says:

    Dear all,
    As i am concern the concept of was introduced to encourage the sole proprietor to do the business under companies. and for that purpose concept of OPC was introduced. And as i am aware or as i have interpreted formation of the OPC can be done by one person, but as it is PRIVATE COMPANY the shares must be transferable.

    Please Correct if i am wrong.

  2. Rajas dixit says:

    sir, is their any provision which tells about conversion opc into a private company,if the opc’s turnover goes above a certain limit?

    • Nagaratna Prasad says:

      Sir,

      Rule 6 to Incorporation Rules, 2014 tells about the conversion of OPC into either public or private limited company in certain cases that covers “turnover goes above a certain limit”

  3. B.Chackrapani Warrier says:

    @ Mr Harikrishnan.R

    “their names” is for clause 3(1)(a)/ (b) and “his name” is for clause 3(1)(C). Drafting is perfectly O.K.

  4. Shantanu Srivastava says:

    I don’t think that an OPC can have more than one member as when we read the rules under the Act we find the word “SOLE MEMBER OF OPC” instead of “the member of OPC”.

    But still I want to know other people’s suggestion over it.

    Thanks.

  5. Ashutosh Dorwal says:

    “ Can OPC Have more than one member?
    than answer is “No”. if their is more than one member than it’ll be treated as Private company.

  6. kodandaramaiah says:

    in case of conversion from pvt co to OPC it is true they( members of pvt co ) surrender their rights in favour one member of OPC. That results in OPC having only one member. a nominee will not form an additional member in OPC.

    The views of M/s Nagaratna and Sadana are valid.

  7. CS. Vandana Patel says:

    I agree with Mr Vikrant view

    further Mr.Prasad, i think that consent based on mutual benefit i.e. surrendering shareholder will get price/consideration from 1 member who will be remaining as only member after conversion of company …

    any other views are welcomed…

  8. Nagaratna Prasad says:

    Sir,

    I agree with the point that One Person Company can’t have more than one person.

    However when conversion of a private company into OPC all members and creditors to give consent for such conversion (Rule 7(4) of Incorporation Rules, 2014), that means they are surrendering their membership right?

    Tbanks and Regards,

    Nagaratna Prasad

  9. Vikrant Sadana says:

    Dear Sir

    In “by subscribing their names or his name” the text “their names” is used for Public or Private Companies and the text “his name” is used for One Person Company.

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