One Person Company and it’s Companies Act
The Companies Act, 2013 introduces a new concept of “One Person Company”. This is the first time such a concept is being introduced in India. Basically,it is giving legal corporate status of Proprietorship form of doing business.
Section 2(62) defines a “One Person Company” means a Company which has only one person as a member.
A “One Person Company” as the name suggests needs only one member, unlike a Private Limited Company or a Limited Liability Partnership where a minimum of two members are required.
An “OPC”enjoys benefits of a limited liability, separate legal entity, perpetual succession etc, like Private Limited Company or Limited Liability Partnership.
Similar to a Private Limited Company, a one person company is required to nominate a successor in the event of the demise of the sole member. Such companies are also required to comply with many statutory requirements in the same manner as a Private Limited Company. However it is exempted from conducting Annual General Meetings or Extraordinary General Meetings.
Limited liability: In event of failure, your liability extends only to business assets unlike private limited companies whose liabilities extend to your personal and private property and bank accounts.
Exemption from compliance: Certain sections of laws are not applicable for OPC such as section 96, 98 and sections 100 to 111.
No Agm: being a single ownership company, there is no need for holding an AGM or any extraordinary general meetings.
The memorandum of OPC shall indicate the name of the other person who has given his consent in the prescribed form to be so named and who shall, in the event of the member becoming incapacitated due to death or incapacity to contract, become the member of the company. The written consent of such other person shall also be filed along with the incorporation documents while forming OPC;
The memorandum of the Company shall state the name of the person who in the event of the death of the subscriber shall become the member of the company.
The member has powers at any time to change the name of the nominee by giving notice in the prescribed form. The new nominee should also give his consent to his name so appearing and any change in the nominee shall require amendment in the memorandum of association.
Section 149(1)(a) provides that minimum one director should be appointed in an OPC. There is no restriction to appointing more than one director in an OPC, but maximum no. of directors that can be appointed is 15 as per section 149(1)(b).
Section 152(1) provides that the subscriber to the memorandum shall be deemed to be the first director of the company until director(s) are duly appointed by the member in accordance with the provisions of the section.
REGISTRATION PROCESS OF OPC IN INDIA
One Person Company (OPC) can be incorporated by a natural person resident in India only. In order to register a one person company both the owner and nominee have to be resident of India. Nominee person is the person who will take charge of One Person Company (OPC) in case of death of sole member or in case the sole member becomes unable to become member of One Person Company. Registration of One Person Company is very much similar to that of Private Limited Company. You will need to obtain a DSC or digital signature certificate and DIN which should be applied on your application for the name of the Company. Reservations of name need to be filed separately.
Once this is done a complete set of documents will need to be submitted to the Registrar of Companies. Incorporation documents includes Memorandum and Articles of Association, Proof of Appointment of Nominee Member, Affidavit etc. Once the documents are verified and approved, the registrar of companies will grant you a certificate of incorporation of your company. This process generally takes around 15 days time.
The concept of an OPC is still very new in Indian entrepreneurship and thus very revolutionary, it will take time for such a new concept to be incorporated with complete efficiency, but as and when the time will pass, an OPC will have a sparkling future and it will be embraced as a most successful business concept. The reason behind it is the incorporation of same is less paper work, one person can form a company without any additional shareholder, and if the member is willing to add shareholders, all he needs to do is to modify the Memorandum of Association and file it before ROC. Small entrepreneurs will grow in Indian entrepreneurship, be it weaver, traders, artisans, small to mid level entrepreneurs, OPC is a bright future for them to grow and to get a recognition globally. Foreign Investors will be dealing with one member to establish a corporate relationship and not with a score of shareholders/directors where there are more chances for disparity in ideas, concepts etc for a business to grow. Any foreign company who wishes to establish in India through an Investment, through a merger or through a Joint venture will have to just lock the deal with the member of an OPC, and the venture will be expected to start sooner with more effective results.