Process for Change of Nominee in One Person Company

The subscriber to the memorandum of a One Person Company shall nominate a person as his nominee. The Prior written consent of nominee shall be obtained in Form INC – 3.

Some Questions:

♠ Who can become a nominee of a OPC

Sol: As per Rule 3(1) of the Companies (Incorporation) Rules 2014, only a natural person who is an Indian Citizen and resident in India shall be a nominee for the sole member of a OPC.

♠  Is there any number restriction on acting as a nominee of a person?

Sol: As per Rule 3(2) of the Companies (Incorporation) Rules 2014, no person shall be Eligible to become a nominee in more than one OPC.

♠ What is the concept of nominee in case of OPC?

Sol: As per the first proviso to section 3(1) of the Companies Act 2013, at the time of incorporation of OPC, the sole member of OPC is required to appoint another person as his nominee and his name shall have to be featured in the Memorandum of Association of the OPC.

The nominee so appointed shall:

a. In the event of the sole member’s death; or

b. in the event of the sole member becoming incapacitated to contract; become the member of OPC.

♠ Who cannot become a Member of OPC or act as a nominee in OPC

Sol:

1. Minor (as per Rule 3(4) of the Companies (Incorporation) Rules 2014). A minor cannot even hold share with beneficial interest.

2. Foreign Citizen

3. Non Resident (see meaning of resident in India above and relate)

4. A person incapacitated to contract

5. Persons other than a Natural Person i.e. living human being

STEPS TO NOMINATE A NOMINEE

• The member of a One Person Company needs to first obtain written consent from the person they intend to nominate as a nominee.
• The name of the individual nominated needs to be mentioned in the memorandum of the One Person Company.
• The nomination needs to be filed with the registrar in Form INC 2, along with written consent of such nominee obtained in Form INC 3 and fee as provided in the Companies (Registration offices and fees) Rules, 2014 shall be filed with the Registrar at the time of incorporation of the One Person Company along with its memorandum and articles.

“I, (Name of the nominee) hereby give my consent to become the member of (Name of the One Person Company), in the event of death of (Name of the sole member of the One Person Company) subscriber/member of the company or his incapacity to contract.”

• This Form does not require a Director Identification Number but Permanent Account Number is compulsory
• Interestingly this form asks for an Identify Proof along with a copy of PAN Card. Resident proof is also required to be enclosed.
• This is a non e-Form. This is required to fill the form electronically and print the form after filling all relevant fields. The Nominee shall sign printed copy of the Form INC – 3. The form should be attached with e-Form INC.2.

Circumstance for Change in Nominee:

1. Nominee can himself withdrawn his consent.

2. Change of Nominee by Sole Member of One Person Company.

3. Death or Incapacity of Sole Member.

1. NOMINEE CAN HIMSELF WITHDRAWN HIS CONSENT

As per rule Sub rule- 4 of the Rule- 4 of The Companies (Incorporation) Rules, 2014

A.  The nominee of the One Person Company can withdraw their consent by giving a notice in writing to the member and to the One Person Company.

B.   In such a circumstance, the sole member shall nominate another person as nominee within 15 days of receiving the notice of withdrawal.

C.   The Sole member shall send an intimation of such nomination in writing to the One Person Company, along with the written consent of such other person so nominated in Form INC 3.

D.  The One Person Company should also within 30 days of receiving the notice of withdrawal of consent file with the registrar, a copy of such notice and the intimation of the name of another person nominated by the member in Form INC 4 along with fee as provided in the Companies (Registration offices and fees) Rules, 2014 and the written consent of the new nominee to be nominated in Form INC 3.

What is the procedure to be followed in case of withdrawal of consent by a nominee?

Solu: As per Rule 4(3) and (4) of the Companies (Incorporation) Rules 2014:

1.   A nominee may withdraw his consent by giving a written notice to the OPC Member/Subscriber and to the OPC concerned.

2.   The sole member/subscriber to nominate a new person as his nominee within 15 days of the notice of withdrawal.

3.       The sole member/subscriber to intimate the OPC

a)   of such nomination in writing and

b)   of the written consent by sending Form No INC.3

4.   OPC shall within 30 days of the receipt of notice of withdrawal as mentioned in clause 1 above, file:

a. Form No INC.4 along with fees prescribed, the intimation of such withdrawal and new nomination and

b. Form No INC.3 along with the fees prescribed, the consent of the new nominee.

2. CHANGE OF NOMINEE BY SOLE MEMBER

As per rule Sub rule- 5 of The Rule- 4 of The Companies (Incorporation) Rules, 2014

A.  Member of a One Person Company can change the nominee at any time by informing the One Person Company in writing.

B.  The Sole member will need to obtain the prior consent of the new nominee in Form INC 3.

C.   The One Person Company shall on the receipt of such intimation, file with the registrar, a notice of such change within 30 days of receipt of intimation of the change in Form INC 4 along with fee as provided in the Companies (Registration offices and fees) Rules, 2014 and with the written consent of the new nominee in Form INC 3.

What is the procedure to be followed for Change in Nomination by a Member or Subscriber of OPC?

Solu: As per Rule 4(5) of the Companies (Incorporation) Rules 2014 The subscriber or member of OPC can change his nominee at any time or for any reason by giving a notice in writing to the OPC.

1.    OPC subscriber to obtain prior consent of new nominee in Form No INC.3.

2.    OPC to file with the Registrar within 30 days of receipt of intimation of change:

a. Form No INC.4 along with fees prescribed, the intimation of suchcessation and new nomination and

b. Form No INC.3 along with the fees prescribed, the consent of the new nominee

3. DEATH OR INCAPACITY OF SOLE MEMBER

A. In case of death or incapacity to contract of the sole member, the nominee will become the only member of the OPC.

B. The new member needs to nominate a new nominee within 15 days of becoming a member.

C. The One Person Company shall file with the registrar an intimation of such cessation and nomination in Form INC 4 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 within 30 days of the change in membership and with the prior written consent of the person so nominated in Form INC 3.

CONCLUSION:

OPC will give greater flexibility to an individual or a professional to manage his business efficiently and at the same time enjoy the benefits of a company. Company law experts see a rise in registrations of one-person companies once the Bill is enacted into law. The concept of OPC will also help many foreign companies, which need to appoint a minimum of two nominees now when they form a wholly-owned subsidiary. OPC will open the avenues for more favorable banking facilities, particularly loans, to such proprietors. Besides, the concept will boost flow of foreign funds in India as the requirement of nominee shareholder would be done away with.

Experts feel the key challenge for such a company will be to ensure that supporting legislations also recognize such a company as an entity and not just an extension of a sole proprietorship.