The Companies Act 2013 has introduced a new concept of “One person company”. One person company (OPC) provides an avenue for a person who wants to venture into a business under the guise of organized business structure. Such a company will be in the nature of a private company. This article shall focus on the formation of a “One Person Company”.
In the case of a one-person company at the time of registration, a second person’s name is also required to be registered who shall become the member of the company if the first member dies or become incapacitated to contract. The second member in this respect is required to give written consent of his willingness.
The “One Person Company” may, by intimation in writing to the company, change the name of the person nominated by him at any time for any reason. (Form No INC.3 is required to be filed).
Requirements of a One person company:
1. Only Indian citizen and resident* in India (for both the member and the nominee). (*resident refers to a person who has resided for 180 days or more in the country in the preceding year.)
2. A person can incorporate more than 1 “one person company”. The same relaxation is available for a nominee as well.
3. Such a “one person company” cannot be formed for a charitable purpose, neither can such a company carry out Non-Banking Financial Investment activities (including investment in securities).
4. Such “one person company” can be converted into any other kind of company. However such conversion is not possible unless two years have expired from the date of incorporation of “One Person Company.”
Application For Incorporation Of “One Person Company”.
The Name Reservation, Allotment of Director Identification Number (DIN), Incorporation of New Company, Allotment of PAN and Allotment of TAN by in one form by applying for Incorporation of a new company through SPICe (Simplified Proforma for Incorporating Company electronically) form (INC-32; 33;34) in addition the name of the nominee as mentioned above is also required to be filed.
When Ceases To Operate As “One Person Company”
When the paid-up share capital of a One Person Company exceeds fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees, it shall cease to be entitled to continue as a One Person Company.
The company then within 6 months from the date the threshold was crossed has to mandatorily convert itself into a public company (minimum of 7 members and 3 directors) or a private company (2 members and 2 directors). The “one person company” is also required to reflect such a change in its MoA and AoA.
Notice to Registrar of Companies in Form No.INC.5 informing that it has ceased to be a One Person Company
- Failure to mention the name of the nominee or re-nominate a nominee: Fine which may extend to Rs.10,000 and with a further fine which may extend to Rs. 1000 for every day after the first during which such contravention continues.
- Failure to convert to a public company or private company: Fine which may extend to Rs.10,000 and with a further fine which may extend to Rs. 1000 for every day after the first during which such contravention continues.
— Advocate Ravindra Vikram, Ph: +91-94100-22521
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