The concept of One Person Company [OPC] is a new vehicle of business, introduced by The Companies Act, 2013. As per section 2(62) of the Companies Act, 2013,
Means an individual person can now constitute a Company under this concept.
In simplest form One Person Company means a company with only one person as a member. He will be the shareholder of the company and avails all the benefits of a private limited company. An OPC is classified as a private company under Companies Act.
FEATURES OF OPC
- Only One Shareholder– Only a natural person, who is an Indian citizen and resident in India, shall be eligible to act as a member of One Person Company. The term “Resident in India” means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year.
- Limited liability- In One Person Company, the liability of shareholder is limited to his shareholding.
- Easy Transferability– Shares are easily transferable by a shareholder to any other person. This can be done by Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate.
- Separate Legal Entity– A company has a separate legal entity and considered as a juristic person. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for any debts.
- Nominee for the Shareholder– The Shareholder shall nominate another person who shall become the shareholders in case of death/incapacity of the original shareholder. Such nominee shall give his/her consent and such consent for being appointed as the Nominee for the sole Shareholder. Only a natural person, who is an Indian citizen and resident in India, shall be a nominee for the sole member of a One Person Company.
- Director– A minimum of One Director is required under OPC. The Sole Shareholder can himself be the Sole Director. The Company may have a maximum number of 15 directors.
- Easy Funding – One Person Company can raise funds through venture capital, financial institutions, angel investors etc and thus graduating itself to a private limited company.
POWER POINTS OF OPC
- In OPC, the member must be:
– Individual and not any business entity
– Indian nationality
– resident of India.
- Paid up capital in OPC is
– Rs. 1 Lakh ( minimum)
– Rs. 50 Lakhs (maximum)
If exceeds then it is required to get it converted into public or private company.
- Maximum turnover Limit – Two Crore Rupees.
If exceeds then it is required to convert it into public company or a private company.
- OPC should have at least one Director. In case, the articles of the company doesn’t state otherwise, the Subscriber / Sole shareholder shall be deemed to be its first director until another is appointed by the member. A One Person Company can have more than one Director.
- No additional shareholder or member can be included in the OPC.
- Provisions of conducting Annual General Meeting (AGM) and Extra Ordinary General Meeting do not apply to an OPC.
- The following persons are not eligible to register an OPC in India :
- Non Resident Indian.
- Minor – A minor cannot even hold beneficial interest in OPC.
- Company/LLP/Body Corporate
- Overseas Citizen of India.
SHORTCOMINGS OF OPC
- OPC restrict to have more than one member and prohibits invitation to the public for subscription of the shares of the company.
- No minor can become a member or nominee of OPC or can hold its share.
- OPC is not easy to set up. For one, it requires a lot of paperwork and is a time-consuming process.
- The company cannot convert itself into any other kind of company unless 2 years has been expired from the date of incorporation.
- OPC being a private company is not entitled to borrow from others.
- The capital of the OPC is only to the extent of available funds of the person who owns OPC.
Rules for Incorporation of One Person Company
Under the Companies Act 2013, a new form of business entity called the One Person Company (OPC) is introduced. Rules for incorporation of a One Person Company have been drafted under Companies Act 2013. In this article, we will take a glimpse of the rules for the incorporation of a one person company.
Who can incorporate a One Person Company?
As per the new Companies Act 2013, only one individual of Indian nationality and resident of India can form OPC. “Resident of India” means he must have stayed for more than 182 days during the immediately preceding financial year. One member cannot incorporate more than 5 companies. Also, a person cannot incorporate more than five One Person Company as per MCA rules.
Nominee in a One Person Company
In case of the death or incapacity to contract of a person incorporating a One Person Company (original owner), he should nominate one person that would become the member of the OPC. The name of nominee should be specified in the memorandum and written consent should be obtained from the concerned nominee.
Automatic conversion of OPC into Private Limited or Limited Company
As per the new Companies Act 2013, owner can operate business entity as OPC if it fulfill following conditions:
- The paid-up share capital of a One Person Company should not exceed fifty lakh rupees.
- The average annual turnover during the relevant period should not exceeds two crore rupees.
- In case, if either of the condition is not fulfilled, then it is required to be converted into a Private Limited or Limited Company within six months of the date on which paid-up share capital exceeds beyond fifty lakh rupees or the last day of the relevant period during which its average annual turnover exceeds two crore rupees or the close of the financial year during which its balance sheet total exceeds one crore rupees.
To get your One Person Company registered click here
Author: This blog is written by Ms. Chanchal Sharma, a passionate blogger of Aapka Consultant.
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