All about One Person Company

Contributed by: CS Priya Garg*

opc

The concept of One Person Company is a  new introduction to the Companies Act 2013 which allows any person to incorporate a company on its own with concessional/relaxed requirements under the Act.

Definition of One Person Company

As per Section 2(62) of the Companies Act, 2013 One Person Company ‘means a company which has only one person as a member’

Restrictions on One Person Company

  1. Only a natural person who is an Indian citizen and resident in India-
    1. shall be eligible to incorporate a One Person Company;
    2. shall be a nominee
  1. No person shall be eligible to incorporate more than a One Person Company or become the nominee in more than one such company.
  1. Where a natural person, being member in One Person Company becomes a member in another such Company, by virtue of his being a nominee in that One Person Company, such person shall meet the eligibility criteria specified in point (2) within a period of one hundred and eighty days, i.e., he/she shall withdraw his membership from either of the Company’s within one hundred and eighty days.
  1. No minor shall become member or nominee of the One Person Company or can hold share with beneficial interest
  1. A One Person Company cannot be incorporated or converted into a company with a non-profit and charitable object.
  1. Such Company cannot carry on Non-Banking Financial Investment activities including investment in securities of a body corporate.
  1. No such company can convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except when the paid up share capital is increased beyond fifty lakh rupees or its annual turnover in the immediately preceding three consecutive financial years exceeds two crore rupees.

Requirements of incorporating a One Person Company

  • A shareholder and director of One Person Company shall have Director Identification Number (DIN) issued in his name.
  • A nominee who shall become the shareholder in case of death/incapacity of the original shareholder.

Steps to Incorporate One Person Company (OPC)

1.Obtain Digital Signature Certificate [DSC] for the proposed Director(s).

2.Obtain Director Identification Number [DIN] for the proposed director(s).

3.Apply for name approval in INC 1 with the word OPC in name

4.After name approval file for incorporation in INC 2/INC 7

Documents required to be attached in INC 2/INC 7

  • MOA and AOA
  • INC 8 INC 9
  • INC 3 should be attached as scanned document
  • DIR 2
  • PAN card Id proof and residential proof
  • Utility Bill and NOC for registered office address

All documents to be attached as per Companies Incorporation Rules 2014

Some Important Points

  • Authorised and subscribed capital should be same in One Person Company
  • In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover of immediately preceding three consecutive financial years exceeds two crore rupees, then the OPC has to mandatorily convert itself into a private or public company.
  • One Person Company cannot do the object of finance or investment related services
  • No person shall be eligible to incorporate more than a One Person Company or become the nominee in more than one such company.

Penalty

If One Person Company or any officer of such company contravenes the provisions of the rules, One Person Company or any officer of the One Person Company shall be punishable with fine which may extend to ten thousand rupees and with a further fine which may extend to one thousand rupees for every day after the first during which such contravention continues.

Now One Person Company can be formed in Simplified Form for Incorporating a Company (SPICe Form), where the name can be applied along with relevant documents.

_______________________

* Priya Garg is an Associate Company Secretary having 2 years of working experience and have in-depth knowledge of Companies Act 2013. She is presently doing law. She can be contacted at gargpreeya@gmail.com
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About maheshspeak

I write randomly on law, jurisprudence, polity, travel, food and anything else interesting. You can also visit my personal homepage at maheshsreenivasan.com
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