1. Definition
As per section 2(62) of the Companies Act, 2013, “One Person Company” means a company which has only one person as member
OPC
2. Salient Features of OPC
1. It must have only one member at any point of time and may have only one director.
2. It is run by individuals yet OPCs are a separate legal entity similar to that of any registered corporate.
3. A One Person Company is incorporated as a private limited company.
4. An OPC limited by shares shall comply with following requirements:
5. It shall have minimum paid up capital of INR 1 Lac
6. Restricts the right to transfer its shares.
7. Prohibits any invitations to public to subscribe for the securities of the company.
8. An OPC is required to give a legal identity by specifying a name under which the activities of the business could be carried on.
9. The words “One Person Company” should be mentioned below the name of the company, wherever the name is affixed, used or engraved.
10. The member and nominee should be natural persons, Indian Citizens and resident in India
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.
11. No minor shall become member or nominee of the One Person Company or hold share with beneficial interest.
12. One person cannot incorporate more than one OPC or become nominee in more than one OPC.
13. OPC to lose its status if paid up capital exceeds Rs 50 lakhs or average annual turnover is more than 2 crores in three immediate preceding consecutive years.
14. Such Company cannot be incorporated or converted into a company under section 8 of the Companies Act, 2013.
15. No such company can convert voluntarily into any kind of company unless 2 years have expired from the date of incorporation, except in cases where capital or turnover threshold limits are reached.
16. An existing private company other than a company registered under section 8 of the Act which has paid up share capital of Rs 50 Lakhs or less or average annual turnover during the relevant period is Rs 2 Crores or less may convert itself into One Person Company by passing a special resolution in the general meeting.
3. Privileges Available to OPC
1. OPCs would provide the start-up entrepreneurs with new business idea.
2. OPC provides an outlet for the entrepreneurial impulses among the professionals.
3. The advantages of limited liability. The most significant reason for shareholders to incorporate the ‘single-person company’ is certainly the desire for the limited liability.
4. OPCs are not proprietorship concerns; hence, they give a dual entity to the company as well as the individual, guarding the individual against any pitfalls of liabilities. This is the fundamental difference between OPC and sole proprietorship.
5. Unlike a private limited or public limited company (listed or unlisted), OPCs need not bother too much about compliances.
6. Businesses currently run under the proprietorship model could get converted into OPCs without any difficulty.
7. OPCs require minimal capital to begin with. Being a recognized corporate, could well raise capital from others like venture capital financial institutions etc., thus graduating to a private limited company.
8. Mandatory rotation of auditor after expiry of maximum term is not applicable
9. The annual return of a One Person Company shall be signed by the company secretary, or where there is no company secretary, by the director of the company.
10. The provisions of Section 98 and Sections 100 to 111 (both inclusive), relating to holding of general meetings, shall not apply to a One Person Company.
11. One Person Company needs to have minimum of one director. It can have directors up to a maximum of 15 which can also be increased by passing a special resolution as in case of any other company.
12. For the purposes of holding Board Meetings, in case of a one person Company which has only one director, it shall be sufficient compliance if all resolutions required to be passed by such a Company at a Board meeting, are entered in the minutes-book, signed and dated by the member and such date shall be deemed to be the date of the Board Meeting for all the purposes under this Act. For other One Person Companies, altleast one Board Meeting must be held in each half of the calendar year and the gap between the two meetings should not be less than 90 days.
13. The financial statements of a one person company can be signed by one director alone. Cash Flow Statement is not a mandatory part of financial statements for a One Person Company. Financial statements of a one person company need to be filed with the Registrar, after they are duly adopted by the member, within 180 days of closure of financial year along with all necessary documents.
14. Board’s report to be annexed to financial statements may only contain explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report.
4. Types of OPC (Section 3(2))
1. A company limited by shares
2. a company limited by guarantee; or
3. an unlimited company.
5. Directors {Sections 152(1), 149(1)(a) & (1)(b)}
1. Articles of a company may provide for the appointment of the first directors
2. If articles are silent then the subscriber to the memorandum who is an individual shall be deemed to be the first director of the company
3. May have a single director
4. Maximum-15 directors and more than 15 directors after passing Special Resolution
5. Director must have stayed in India for a total period of not less than 182 days in the previous calendar year.
6. Meetings of Board {Section 173(5)}
1. At least one meeting of the Board of Directors to be conducted in each half of a calendar year
2. Gap between the two meetings should not be less than ninety days
3. Exemption – if company has only one director.
7. Contract by One Person Company {Section 193(1)}
1. One Person Company limited by shares or by guarantee enters into a contract with the sole member of the company who is also the director of the company, the terms of contract or offer are in writing or contained in a memorandum or recorded in the minutes of the Board meeting held next after entering into the contact.
2. Inform the Registrar about every contract entered into by the company within a period of fifteen days from the date of approval by the Board of Directors.
3. Contracts in ordinary course of business not required to comply with the above
8. Financial Statement (Section 134)
1. The financial statement, signed by one director, for submission to the auditor for his report thereon.
2. The report of the Board of Directors to be attached to the financial statement.
3. Board of Directors Report of OPC means a report containing explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report.
4. Filed with ROC within 180 days from the closure of the financial year.
5. Financial statement, may not include the cash flow statement
9. Exemptions available to OPCs under the Companies Act, 2013
1. Financial statement, may not include the cash flow statement
2. Section 96. Option to dispense with the requirement of holding an AGM.
3. Section 98. Power of Tribunal to call meetings of members.
4. Section 100. Calling of extraordinary general meeting.
5. Section 101. Notice of meeting.
6. Section 102. Statement to be annexed to notice.
7. Section 103. Quorum for meetings.
8. Section 104. Chairman of meetings.
9. Section 105. Proxies.
10. Section 106. Restriction on voting rights.
11. Section 107. Voting by show of hands.
12. Section 108. Voting through electronic means.
13. Section 109. Demand for poll.
14. Section 110. Postal ballot.
15. Section 111. Circulation of members’ resolution.
10. Compliance requirements
10. Compliance Requirements
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Compiled by CA Anand Joshi